Getting an edge

Investors are always very keen to be on the right side of trades as soon as possible. Data sources that offer clues on commodity usage are highly sought after. A few weeks ago oil traders thought that they had come across a data source from Apple which gave them an edge. It seemed to offer a way that oil traders could potentially monitor real-time fuel demand from consumers.

Majority of oil consumption is through transport

Nearly three-quarters of all oil consumption worldwide is due to vehicle movements. It was thought that Apple could monitor real-time fuel demand as consumers planned their journeys. This data seemed especially valuable as traders had been recently looking for clues on the speed of the post COVID-19 lowdown recovery/

Apple’s tracking oil demand

The data from Apple came mid-April when Apple revealed new data on human mobility trends. This captured the user’s activity in looking for directions on smartphones. It was thought the user’s search activity could offer real-time insight into immediate fuel demand levels as journeys were planned.

However, it was not as effective as thought

However, the user’s data was found out to be ineffective in indicating fuel demand. This was due to the fact that the user’s search data did not translate into actual activity. US Memorial Day normally starts the US summer driving season, but demand for oil fell for the week, including that holiday, by ~6% according to the US Energy Information Administration (EIA). The problem with the data is that it was based on search informational as opposed to actual distance traveled. This makes sense because consumers might just want to search for the location of a business/ building to see how far away it is in case of an order problem or just out of curiosity. It does not necessarily equate to fuel demand.

Other sources energy traders use

So, the search for the ‘holy grail’ of oil data continues. RBC analyst Michael Tran said currently he finds TomTom more reliable than Apple map searches. He attributes this in part because most people don’t use apps to map out their commute. RBC combines TomTom data with other geolocation data that is used in the house for their research purpose and to get a better sense of oil demand.