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Julian Lee

Oil Markets Are Volatile But They’re Not Broken

Hold onto your hats, 2022’s wild oil ride isn’t done yet.

No smooth waters for oil in 2022

No smooth waters for oil in 2022

Photographer: Carina Johansen/Bloomberg

Oil markets are broken. Extreme volatility and a lack of liquidity mean that crude futures have become disconnected from tight physical oil markets. At least that’s what some loud voices in the oil world are telling us. But I suspect they may be talking their own books.

Complaining that markets are broken suggests to me that somebody has traded on the wrong side of the recent tumble in oil prices, positioning for a rise that hasn’t happened.