Critics of the boom in commodities trading – the sort who allege manipulation, but only when prices are rising – sometimes forget that every futures contract is rooted in a physical delivery (even if it is actually settled for cash). Some “l(fā)egitimate” hedgers, particularly in the US, are being reminded of this the hard way.

Airlines, truckers and utilities are reeling from a sharp gap in the price between refined products and the West Texas Intermediate crude futures, which are based on the price at the physical delivery point in Cushing, Oklahoma. Crude is used as a hedge because the market is liquid and the price is usually a good proxy for jet fuel, diesel and the like. But a physical glut around Cushing has skewed prices into what one airline boss calls a “silent killer”. Oil for delivery at Cushing plunged nearly $20 a barrel below less valuable Brent crude early this year. May futures remain more than $12 lower.

Hedgers’ loss is others’ gain, giving a temporary windfall to Midwestern refiners. JPMorgan estimates that the Cushing surplus, and demand from power-starved Japan, could widen the crack spread (the gap between crude and refined product prices) to a juicy $50 a barrel on diesel this summer.