Backwardation vs. contango: reading market signals
The WTI futures curve tells a story about supply, demand and storage capacity. Here's how to interpret the structure.
This article will be published shortly via our MDX content system. The full analysis will appear here once the Contentlayer/MDX pipeline is configured.
Frequently asked questions
What is backwardation in oil?
Backwardation occurs when the current spot price of oil is higher than futures contract prices further out in time. This usually signals near-term tightness: buyers pay a premium for immediate delivery.
What is contango?
Contango is the opposite of backwardation: futures prices are higher than the spot price. This often points to oversupply or expected price increases, making oil storage attractive.
What is the difference between WTI and Brent?
WTI (West Texas Intermediate) is the US benchmark, traded in Cushing, Oklahoma. Brent is the international benchmark from the North Sea and sets the price for roughly two-thirds of global oil. Brent typically trades slightly above WTI.
What does the futures curve mean for oil prices?
The futures curve shows the expected oil price per delivery month. Its shape — backwardation or contango — reveals market sentiment, supply, demand and storage capacity, and is a key signal for traders and analysts.
Related analysis
Hormuz escalation: what does it mean for WTI?
Recent tensions around the Strait of Hormuz are pushing risk premiums higher. We analyse the futures curve and geopolitical scenarios.
GeopoliticsSanctions & tanker routes: the quiet shift
Shadow fleet, route diversions and insurance premiums — how Iran and its adversaries are reconfiguring logistics.