Oil spread blow-out portends new price slump

New York

ANOTHER sharp dive in oil prices may be nearer than you think, according to traders who see the market flashing warning signs that vital Oklahoma storage tanks will fill up even sooner than expected.

While benchmark US crude oil futures still appear to be holding firm after trading at around US$50 a barrel for the past month or so, the spread between first and second-month oil futures collapsed last week, with prompt prices diving by more than US$1 to their deepest discount in four years.

Shorthanded as "JK" in market jargon, US West Texas Intermediate for April delivery (known as "J") were US$2.38 a barrel cheaper than those for May ("K") on Friday, a gap that likely signals the early onset of another milestone in the great oil supply glut, running out of space in Cushing, Oklahoma, delivery point for the New York Mercantile Exchange contrac…