We are seeing a notable disconnect play out in energy markets, one where the supply/demand metrics continue to be grim yet prices behave as if something major has changed.

Last week brought much-needed relief to oil producers reeling from prices in the low-$30s range. As of Monday, WTI had risen 40% from its 2016 low of $28.74. Brent crude followed suit, breaking the $40 mark on Monday as it climbed away from its 12-year lows reached in January.

The rally coincided with a cautious recovery in commodity prices like iron ore as the Chinese government signaled a willingness to engage in another round of fiscal stimulus. Even more significantly for iron producers, a government plan was leaked suggesting that Beijing will work to reign in industrial overcapacity in the state-owned sector – the country’s ‘zombie industries.’

The resulting recovery in commodity prices and bets against the Fed raising rates bolstered confidence throughout equity and commodity markets. News outlets started calling the bottom for oil prices; to the optimistic, a new commodity super-cycle had begun.

Then Tuesday came and brought some bitter perspective to those betting on a recovery. The day’s trading saw oil prices down 3-4% in a selling trend that spread into equity markets in Europe and North America. Now the gloom is setting in again and the editorials calling for a $15 drop in oil prices are appearing on cue.