In this episode of Trading Corner, James and Manny unpack an unusually balanced crude market, where everything should be moving - but isn’t. With WTI defying fundamentals, Brent spreads losing steam, and products drifting post-rally, they dig into:

Why front-end WTI time spreads are surging above $1
What Brent-Dubai convergence says about physical flows
Why the data window and physical diffs are underwhelming despite peak margin season
The resilience of fuel oil cracks and the tightness still priced in
A cooling margin environment and what that means for product hedges
Trading strategies for a sideways market: short July/Aug Dated and exit half of Dec ‘26 gasoline longs

Glossary terms featured this week:

Murban

A light, sweet crude oil produced in Abu Dhabi, known for its high quality and used widely in Asia; a benchmark in the ICE Futures Abu Dhabi market.

Rally

A period of sustained increase in price action.

Margins

The difference between the prices of refined products and crude inputs, weighted by yield, which represents the refinery’s profit (excluding transport and power).

DFL

Dated-to-Frontline. A monthly contract that measures the premium of physical North Sea crude (Dated Brent) to Brent swaps.

Time Spread

A time spread, or ‘calendar spread’, in oil derivatives, is a strategy where a trader simultaneously buys and sells two futures or options contracts for the same oil quantity but with different expiration dates. This strategy aims to profit from the change in the price difference, or spread, between these two contracts over time.

WTI

WTI is a light, sweet crude oil that is produced in the United States. It is the main benchmark for US crude oil.

Crack

Differential between a barrel of product and barrel of crude.

Diffs

Differentials or "diffs" are contracts priced against one another.

Fly

A calendar spread strategy involving three consecutive contract months.

Brent Spreads

A differential of a shorter-term and longer-term Brent futures contract. E.g. the M1/M2 spread is the M1 Brent futures minus the M2 Brent futures contract.

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CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs and spread bets. You should consider whether you understand how CFDs and spread bets work and whether you can afford to take the high risk of losing your money.

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