See today's Wall Street Journal. Some quotes from the article:
On Friday, for example, the bellwether oil contract on the New York Mercantile Exchange closed at $63.38 a barrel, nearly 5% less than the $66.49-a-barrel close of North Sea Brent crude, the London benchmark quoted on the ICE Futures exchange.
The disparity, which is partly rooted in structural changes in the energy markets -- including how and where oil is produced and shipped -- means the standard barrel of oil no longer has a straightforward price.
In a transaction on Nymex, a trader agrees to buy or sell oil at a set price in the future. Not all trades result in exchange of actual barrels of oil. Speculators, for example, may close out a contract before it expires by making another trade that cancels it.
But if they do take or make physical delivery on the benchmark contract, they must do so in Cushing, Okla., a landlocked oil hub accessible primarily by pipeline. Nymex designated Cushing as the delivery location more than two decades ago when Texas and Oklahoma were bigger oil producers than they are today.
The immediate cause for concern is a glut of oil in Cushing storage tanks.