Spot vs Futures Explained

Spot price is cash on the barrelhead today, at a specific location. Futures price is for delivery at a set later month, standardized and exchange traded.

The two anchor each other: physical cargoes price as spot plus or minus differentials, or as formulas off monthly futures averages. The gap between the two is the cost of carry plus convenience yield, which is why the curve slopes up in gluts, paying storage, and inverts in shortages, paying immediacy.

Settlement and the possibility of delivery force them to converge at expiry. When someone quotes a commodity price, they almost always mean the front futures month, not the barrel in the tank..