Methodology Average Inventory Levels |
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The graphs displaying inventory levels of crude oil and petroleum products, crude oil, motor gasoline, distillate fuel oil, residual fuel oil, and propane provide the reader with actual inventory data compared to an “average range” for the most recent 5-year period running from January through December or from July through June. The ranges also reflect seasonal variation for the past 7 years. The seasonal factors, which determine the shape of the upper and lower curves, are estimated with a seasonal adjustment technique developed at the Bureau of Census (Census X-11). The seasonal factors are assumed to be stable (i.e., the same seasonal factor is used for each January during the 7-year period) and additive (i.e., the series is deseasonalized by subtracting the seasonal factor for the appropriate month from the reported inventory levels). The intent of deseasonalization is to remove only annual variation from the data. Thus, deseasonalized series would contain the same trends, cyclical components, and irregularities as the original data. The seasonal factors are updated annually in October, using the 7 most recent years’ final monthly data. The seasonal factors are used to deseasonalize data from the most recent 5-year period (January-December or July-June) in order to determine a deseasonalized average band. The average of the deseasonalized 60-month series is the midpoint of the band, and two standard deviations of the series (adjusting first for extreme points) is its width. When the seasonal factors are added back in (the upper curve is the midpoint plus one standard deviation plus the seasonal factor, and the lower curve is the midpoint minus one standard deviation plus the seasonal factor), the “average range” shown on the graphs reflects the actual data. The ranges are updated every 6 months in April and October. |