There Is A Huge Physical Disconnect In Energy Markets

This week, energy futures markets were quite reactive to the downside (although to a lesser extent than equities were to the upside) on hopes of a quick resolution this week. However, it’s worth taking a closer look at the physical market which seems somewhat more concerned than the (relative) optimism in the financial market.

As Goldman commodity specialist Tallulah Adams writes today, the biggest disconnect in client conversations has been the view around oil prices from macro vs physical or specialist clients, with the latter seeing the current futures as underpriced vs. the size of the disruption.