The Tale of Two Curves: Is the WTI Curve Predicting a Slowdown in US Shale Production?

The crude oil futures curves are telling two different stories right now. The divergence between West Texas Intermediate (WTI) and Brent crude curves reveals a fundamental shift in how traders may view the future of American energy production. Both benchmarks currently trade in backwardation—a market structure where near-term prices exceed future prices—but WTI exhibits a much steeper backwardation than Brent. Does this pronounced backwardation in WTI reflect an acute tightness in the US oil market, driven by concerns about declining shale productivity and the industry's ability to maintain current production levels? Let’s take a look.