Oil surged to the highest level in seven years as robust demand and strained supplies make physical markets run hot in the world’s largest consuming region.

Prices for physical cargoes do not always trade in tandem with oil futures and when differentials widen rapidly and considerably, they can indicate speculators have oversold or overbought futures versus fundamentals.

Brent oil futures have jumped hundred since the start of the year but the physical market is still racing ahead, with differentials for some grades hitting multi year highs, suggesting a tight market will push the futures rally on.