Physical crude oil market steams ahead

Rallying on: A worker passes stores of oil drums and gas flares at an offshore oil platform in the Persian Gulf. Brent oil futures have jumped 10% since the start of the year, and the physical market is still racing ahead. — Bloomberg

LONDON: Frantic oil buying driven by supply outages and signs the Omicron variant won’t be as disruptive as feared has pushed some crude grades to multi-year highs, suggesting the rally in Brent futures could be sustained a while longer, traders say.

Prices for physical cargoes do not always trade in tandem with oil futures and when differentials widen rapidly and considerably, they can indicate speculators have oversold or overbought futures versus fundamentals.