Financial TimesMay 31, 2019 4:27 pm by David Sheppard , Energy Editor Brent crude lost more than 10 per cent in May to fall back below $65 a barrel, as fears over the worsening US-China trade war rattled investors and put oil on course for its worst month this year. But traders are warning that the spot price is not telling the full story. Instead, some are pointing at the way oil prices are moving for contracts on different The reality is the physical market is extremely tight right now, said Amrita Sen at Energy Aspects. The problem for the spot price is [that] it is weighed down by economic concerns, which have been compounded by longer-term fears about US shale growth and the strength of demand. It is a battle between the tightness in the market right now and future fears of oversupply. This could trigger a rebound in oil, should tensions between the US and China begin to ease. The relative lack of oil supply can be seen most clearly in two closely watched spreads. The Brent contract for next-month delivery is trading at roughly $1.30 a barrel above the one for the following month, while its premium over contracts for delivery six months later has reached almost $4 a barrel. In both cases that is the largest premium in at least five years. Put another way, the last time traders were prepared to pay this much extra to secure barrels, crude was trading closer to $115 a barrel and Isis was rampaging across swaths of northern Iraq, putting at risk supplies from Opecs second-largest producer. This time the tightness stems from US sanctions on Iran and Venezuela, while Opec and its allies have been cutting output to try to boost the price. Russia, which has largely aligned with Saudi Arabia on oil policy for the past three years, has also seen its supplies hit by organic chloride contamination in one of its main pipelines to Europe. But if the market is so tight, it raises a question: why is the spot price falling, even as it remains strong relative to contracts for later this year? Traders point to a host of reasons, such as signs that US shale output is still growing rapidly, and pressure from US president Donald Trump on Opec to boost supplies to help keep prices low.