Physical vs. Financial Flows

Physical vs. Financial Flows distinguish between movements of actual commodities and trading activity in financial instruments.

These flows do not always align.

Interpreting Flow Divergence

Separating flow types helps to:

• Understand price moves beyond speculation
• Identify disconnects between paper and physical markets
• Improve interpretation of short-term volatility

Flow-driven price behavior

Periods of divergence often coincide with heightened uncertainty or market stress.

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Event Sensitivity in Commodity Markets

Inventory Signals

Inventory Signals describe how inventory levels inform expectations about supply-demand balance.

Information Flow and Commodity Prices

Supply Shocks

Supply Shocks describe how unexpected disruptions affect price dynamics in commodity markets.

Risk Anticipation

Risk Anticipation focuses on identifying emerging risks before they fully materialize in prices.

Data-Driven Hedging

Data-Driven Hedging describe how forward-looking insights inform hedging choices under changing market conditions.

Futures Curves & Market Signals

Futures Curves and Market Signals describe how the structure of the futures curve provides insight into underlying supply, demand, and inventory conditions.

Futures Pricing Signals in Commodity Markets

Futures prices are not pure “expectations of the spot price.” They also reflect physical realities and financial frictions—inventory and storage economics, market tightness, hedging pressure, and risk premia.

Commodity Forecasting

Commodity forecasting refers to the process of predicting future prices or availability of raw materials such as crude oil, gas, metals, or agricultural products.

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Physical vs. Financial Flows

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Price Discovery

Carry Costs

Inventory Coverage

Liquidity Deterioration

Basis

Open Interest

Roll Yield

Backwardation

Contango

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Forecast Confidence

Price Anchoring

Arbitrage

Correlation Dynamics

Scenario-Based Forecasting

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