"Dysfunctional Futures Market" May Spark Next EU Energy Crisis As Liqudity Crunch Looms | ZeroHedge
Europe's energy sector is facing a perfect storm as a dysfunctional futures market may lead to a new crisis where prices move higher due to a liquidity crunch, according to Reuters. Sharp market swings in natural gas and electricity prices since Russia's invasion of Ukraine have left some oil and gas companies without the necessary funds to hedge their physical trades if they cannot satisfy margin calls, an exchange requirement for extra collateral to guarantee trading positions when prices rise... "We have a dysfunctional futures market, which then creates problems for the physical market and leads to higher prices, higher inflation," a senior trading source told Reuters. In March, the lack of liquidity became apparent when trading firms, utilities, oil majors, and bankers sent a letter to governments and financial institutions such as European Central Bank for emergency liquidity to shore up energy markets as prices surged. A flurry of traders who hedged their physical positions with
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### Instruction: "Dysfunctional Futures Market" May Spark Next EU Energy Crisis As Liqudity Crunch Looms | ZeroHedge

### Response: Europe's energy sector is facing a perfect storm as a dysfunctional futures market may lead to a new crisis where prices move higher due to a liquidity crunch, according to Reuters. Sharp market swings in natural gas and electricity prices since Russia's invasion of Ukraine have left some oil and gas companies without the necessary funds to hedge their physical trades if they cannot satisfy margin calls, an exchange requirement for extra collateral to guarantee trading positions when prices rise... "We have a dysfunctional futures market, which then creates problems for the physical market and leads to higher prices, higher inflation," a senior trading source told Reuters. In March, the lack of liquidity became apparent when trading firms, utilities, oil majors, and bankers sent a letter to governments and financial institutions such as European Central Bank for emergency liquidity to shore up energy markets as prices surged. A flurry of traders who hedged their physical positions with