Physical Oil Markets Run Hot Before OPEC+ Meets on Crude Output
- Differentials are strengthening in important pricing locations
- OPEC+ nations expected to add barrels to the global market
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The physical oil market, in which millions of barrels of crude are bought and sold each day, is screaming for more supply in the run-up to a pivotal meeting of OPEC+ producers this week.
Whether it’s in the North Sea, the Cushing storage hub in Oklahoma, or the Middle East, futures and swaps in the world’s leading pricing locations are trading deep in a pattern called backwardation. In short, it means traders are willing to pay big premiums to secure physical barrels. The structure wouldn’t look out of place in a $100-a-barrel market.