The world's largest commodity traders draw attention to the risk that volatility in prices may increase due to decreasing liquidity in commodities.
While the recent sharp fluctuations in commodity prices have caused traders to reduce their transactions, this has led to a decrease in liquidity in the market and an increase in volatility in prices.
Speaking at a summit in Switzerland, Huw Jenkins, CEO of Engelhart Commodities Trading Partners, said, “We see that the liquidity between the buyer and the seller is decreasing gradually in the market where the volatility is very high.” The CEO reported that his company has halved its positions in the last 6-7 months.
Many players in the sector are also struggling to meet their huge cash needs to maintain their positions or take new positions due to the fluctuation in the commodity.
Finally, there was a 34 percent increase in European natural gas prices yesterday after Russian leader Putin announced that they would agree to pay in rubles for Russian gas from rival countries. This has been one of the sharpest price fluctuations since the Russian invasion of Ukraine.
Russell Hardy, CEO of Vitol Group, said that “capital in the market is weak and we cannot do business like last year because the costs of doing business have increased”.
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