Market Movers – Feb. 2021

Price action in energy markets benefited most CTA strategies and was a major catalyst for positive performance in February. Two primary drivers of the energy trade emerged in February, one which has been a steady drumbeat behind the market in recent months, while the other was much more specific and acute.

First, continued optimism over economic reopening has seen increased demand for commodities, with energy being one of the main beneficiaries. COVID-19 vaccine doses administered surpassed the number of confirmed COVID-19 cases in the first week of February, providing further support that the vaccine is being implemented effectively in certain parts of the globe and a return to normalcy is closer than we previously thought.

The second component to the energy trade was the so-called “Texas Freeze.” In mid-February, Texas and other states along the Gulf Coast experienced unprecedented freezing temperatures that disrupted the energy supply chain, causing electricity prices to rise exponentially. Most strategy types were able to benefit from the supply shock as wells and refineries had to cease operating due to the frigid temperatures. Although energy markets have retraced some of the February gains, the long-term outlook for the energy markets remains strong; we hope to see managers continue to profit from increased demand as global economies reopen.


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