By: Editorial Team, StoneX Media
Energy traders are navigating a market where price direction appears straightforward but structure suggests deeper complexity. Falling flat prices usually signal easing conditions, yet the curve continues to resist that narrative. Liquidity costs and carry dynamics are shaping decision-making more than headline moves. The result is a market that demands closer attention to structure rather than surface-level trends.
Marco Saggese, VP of Clearing and Execution Sales at StoneX, provides insight into how oil market structure and liquidity signals are influencing trader behavior across European energy markets.
Oil prices have been drifting lower, yet the curve continues to show backwardation, a structure typically associated with tighter supply. As Saggese explains, “you can see the curve gently moving downwards, as production has increased”, which aligns with fundamentals at first glance. However, he adds that traders are puzzled because “we're seeing a falling market with with backwardation in there”. That contradiction is raising concerns that the market is less oversupplied than prices suggest.
Backwardation increases the cost of holding positions, directly affecting liquidity and margins. Saggese notes that for traders, “it makes it very, very difficult for them to trade” because carry costs erode potential returns. Each new position becomes more expensive to maintain in a market that appears to be drifting lower. As a result, traders are becoming more selective and cautious, focusing on structure-driven risk rather than directional conviction.
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--- Written by Frédéric Guétin, StoneX TV Producer
--- Expert: Marco Saggese, StoneX VP of Clearing and Execution Sales
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