Financial markets attempted to buoy benchmark prices as oil and gas markets became volatile in Q1 2020. This created a disconnect in the price spreads between the NYMEX WTI futures benchmark and regional spot prices. The disconnect continued to grow at the beginning of the year until it reached a tipping point in April when prices plunged. Ultimately supply and demand at the regional level through purchasers like storage companies, airlines, and refineries will be what control the true value of crude prices and bring the market back into equilibrium.
Energy Valuation Disconnect: Analysis of the Growing Dissociation Between Oil and Gas Equity Values and Commodity Futures
Over the past month, a disconnect between crude prices and the value of oil companies has manifested itself in the market and until supply and demand fundamentals bring the regional crude prices, futures commodity prices, and equity valuations back into equilibrium, a tiered price disconnect will continue to exist.