US physical crude markets are currently experiencing a period of extreme price volatility, with premiums over benchmark West Texas Intermediate (WTI) crude getting cut in half in some cases over the past month. The shrinking of differentials in the US spot crude market reflects a dramatic narrowing of the price spread between European and US crude futures. The gap between Brent crude futures (traded in London) and Nymex crude futures (traded in New York) had shrunk to less than $13 on Tuesday after hitting a record of almost $30 last month.
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