The spread between WTI futures contracts for immediate delivery and those for delivery a month later soared to the highest level in more than two years.
Cushing inventory stood at 36 million barrels on October 1st, well below the seasonal average of the past five years.
The sharp volatility in the price of oil derivatives indicates a tightening of crude oil supply in the United States, further aggravating the volatility that has plagued the energy market.
The spread between the West Texas Intermediate (WTI) contract for immediate delivery and that for delivery a month later has soared to its largest level in more than two years, suggesting stocks at the crude oil depot in Cushing, Oklahoma will shrink.
"Cushing is the only place where there is excess crude oil, which will be pulled away soon," said Gary Ross, a hedge fund manager at Black Gold Investors LLC, a former senior adviser to the oil industry.
The contract spread, which usually fluctuates only a few cents a day, rose as much as 54 cents early on Monday, bringing the total spread to as high as $1.13 a barrel for the first time since September 2019, and is likely to widen further as investors expect inventories to tighten.
Us crude oil inventories fell to their lowest level since October 2018 in the week to September 17, although they have rebounded slightly since then, according to the US Energy Information Administration (EIA).
Cushing's inventory stood at 36 million barrels on October 1st, well below the seasonal average of the past five years. Cushing crude stocks fell by 2.2 million barrels in the week ended Oct. 8, two people familiar with the matter said, citing the latest data from Wood Mackenzie Ltd.