Analysis: Physical crude oil market steams ahead after Omicron blip | Reuters
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 said.
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.
Brent oil futures have jumped 10% since the start of the year but the physical market is still racing ahead, with differentials for some grades hitting multi-year highs, suggesting a tight market will push the futures rally on.
"These are crazy numbers. There clearly is physical tightness," a North Sea oil trader said.
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