Key Corner of US Oil Market Is Flashing Signs of Supply Glut

A corner of the US crude market closely watched by physical traders is signaling oversupply in the latest indication that a global glut has reached domestic shores.

Light, sweet West Texas Intermediate at the Magellan East Houston terminal is trading 12 cents a barrel cheaper than later-dated oil in a bearish structure known as contango. What’s more, the Gulf Coast barrels have been in contango almost every day since October and show no signs of flipping even as suppliers try to drain inventories to avoid year-end taxes.