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Decoding Futures Market Jargon: Contango vs. Backwardation Prompt: Act as a market analysis assistant. Given the spot price of WTI Crude Oil is $80/barrel and the 6-month futures contract is trading at $85/barrel, identify whether the market is in contango or backwardation. Explain the defining characteristic based on the... show more

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Oil sold off the moment the Iran peace deal appeared. That part makes perfect sense. Nobody wants to be long crude into open supply routes and normalizing tanker flows. The fundamental value of oil is closer to 50 a barrel than 150. But here is where it gets interesting. If this were only supply normalizing, the curve would still hold its shape. Inventories are drained. Tankers are disrupted. Refineries are scrambling. As long as demand is firm, the curve should stay in strong backwardation. Backwardation means front-month crude trades above later contracts. It is the market telling you it wants barrels today. It is a sign of tightness. That backwardation is nearly gone. The prompt spread, the first two contracts, has narrowed to under a buck. The three-month spread has dropped to just over 2, after being 30 not long ago. The front is selling off far harder than the back. Some of that is supply normalizing. The good kind. But when the curve gets this close to contango this fast, it points to something more troubling. Contango is what a glut looks like in the futures market. Too much oil for the demand in front of it. The curve is not there yet. But it is moving that way. And that is the warning. You have to be careful about exactly why oil is plunging this far, this fast.

Oil sold off the moment the Iran peace deal appeared. That part makes perfect sense. Nobody wants to be long crude into open supply routes and normalizing tanker flows. The fundamental value of oil is closer to 50 a barrel than 150. But here is where it gets interesting. If this were only supply normalizing, the curve would still hold its shape. Inventories are drained. Tankers are disrupted. Refineries are scrambling. As long as demand is firm, the curve should stay in strong backwardation. Backwardation means front-month crude trades above later contracts. It is the market telling you it wants barrels today. It is a sign of tightness. That backwardation is nearly gone. The prompt spread, the first two contracts, has narrowed to under a buck. The three-month spread has dropped to just over 2, after being 30 not long ago. The front is selling off far harder than the back. Some of that is supply normalizing. The good kind. But when the curve gets this close to contango this fast, it points to something more troubling. Contango is what a glut looks like in the futures market. Too much oil for the demand in front of it. The curve is not there yet. But it is moving that way. And that is the warning. You have to be careful about exactly why oil is plunging this far, this fast.

Jeffrey P. Snider

50,006 Aufrufe • vor 3 Monaten

I spoke with Mario Nawfal about OIL PRICES: “Market mania is alive and well. That's why oil prices have overshot on the downside. When the dust settles and fundamentals return, oil markets will snap back. Crude oil prices will return to a baseline of around $85-$90 per barrel.”

I spoke with Mario Nawfal about OIL PRICES: “Market mania is alive and well. That's why oil prices have overshot on the downside. When the dust settles and fundamentals return, oil markets will snap back. Crude oil prices will return to a baseline of around $85-$90 per barrel.”

Steve Hanke

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Chris Martenson says that the global oil market has entered a “truly bizarre” phase where historical patterns have been completely broken That's creating a massive disconnect between official trading and economic reality. He says that while a combination of geopolitical shocks in the Red Sea, Libya, and Russia should have driven crude oil to $120 a barrel by now, the futures market remains suppressed even as retail prices for finished products tell a different story. “I'm pretty sure the futures price is a fake price. The real price is what you have to pay to get it.” Chris Martenson

Chris Martenson says that the global oil market has entered a “truly bizarre” phase where historical patterns have been completely broken That's creating a massive disconnect between official trading and economic reality. He says that while a combination of geopolitical shocks in the Red Sea, Libya, and Russia should have driven crude oil to $120 a barrel by now, the futures market remains suppressed even as retail prices for finished products tell a different story. “I'm pretty sure the futures price is a fake price. The real price is what you have to pay to get it.” Chris Martenson

Mario Nawfal

121,768 Aufrufe • vor 1 Monat

The oil market is about to break. Not in price. In availability. Jeffrey Currie 🆔++ on CNBC yesterday and the market still isn’t listening. “It’s not the price of oil that matters here. It’s the availability of oil.” A thread on why the next few weeks could be the most important in the oil market this decade. 🧵

The oil market is about to break. Not in price. In availability. Jeffrey Currie 🆔++ on CNBC yesterday and the market still isn’t listening. “It’s not the price of oil that matters here. It’s the availability of oil.” A thread on why the next few weeks could be the most important in the oil market this decade. 🧵

Qasem Al-Ali

37,933 Aufrufe • vor 4 Monaten

Commodity market guru Jeff Currie on the $150 oil everyone is waiting for: “You're looking for prices over $150 a barrel. We're there. But it's in the product prices, and it's not in the crude.”

Commodity market guru Jeff Currie on the $150 oil everyone is waiting for: “You're looking for prices over $150 a barrel. We're there. But it's in the product prices, and it's not in the crude.”

Steve Hanke

46,804 Aufrufe • vor 18 Tagen

The real price of oil may be hiding in plain sight. Economist & Investment Strategist Philip Pilkington argues the physical crack spread tells a very different story from headline crude prices. Refinery margins suggest the market is still behaving as though oil costs roughly $100 to $110 a barrel, even as futures point much lower. In Pilkington's view, physical demand is exposing what financial markets are obscuring. Philip Pilkington

The real price of oil may be hiding in plain sight. Economist & Investment Strategist Philip Pilkington argues the physical crack spread tells a very different story from headline crude prices. Refinery margins suggest the market is still behaving as though oil costs roughly $100 to $110 a barrel, even as futures point much lower. In Pilkington's view, physical demand is exposing what financial markets are obscuring. Philip Pilkington

Mario Nawfal

78,365 Aufrufe • vor 2 Monaten

The oil price you see online is what’s called the futures market. It’s paper trading. The physical price—what refiners actually pay for the actual barrels of oil being delivered today—just hit $141. That’s a $32 gap. The Chevron CEO has even said that the futures market is based on a perception and just a little bit of information. The last time the physical price was this high was back in 2008 after Bush’s incompetence sent us into the Great Recession. You’re watching the wrong numbers.

The oil price you see online is what’s called the futures market. It’s paper trading. The physical price—what refiners actually pay for the actual barrels of oil being delivered today—just hit $141. That’s a $32 gap. The Chevron CEO has even said that the futures market is based on a perception and just a little bit of information. The last time the physical price was this high was back in 2008 after Bush’s incompetence sent us into the Great Recession. You’re watching the wrong numbers.

Dittie

35,350 Aufrufe • vor 5 Monaten

Commodity market guru Jeff Currie on most of the world's exposure to higher gasoline and diesel prices: “The market is obsessed with the price of crude oil. It's ignoring the price of refined products. Ninety-nine percent of the world has gasoline and diesel exposure. They don't have crude oil exposure."

Commodity market guru Jeff Currie on most of the world's exposure to higher gasoline and diesel prices: “The market is obsessed with the price of crude oil. It's ignoring the price of refined products. Ninety-nine percent of the world has gasoline and diesel exposure. They don't have crude oil exposure."

Steve Hanke

16,950 Aufrufe • vor 18 Tagen

🇺🇸🇮🇷 The crude market sits in backwardation 5% of the time. It has not flipped back. Professor Steve Hanke breaks down what the forward curve is actually telling us about global supply. "If a market is in backwardation, that means that inventories are very scarce and people are trying to borrow from the future and resupply shorts of short inventories." The market started this nearly flat. Something changed it. It hasn't changed back. Steve Hanke

🇺🇸🇮🇷 The crude market sits in backwardation 5% of the time. It has not flipped back. Professor Steve Hanke breaks down what the forward curve is actually telling us about global supply. "If a market is in backwardation, that means that inventories are very scarce and people are trying to borrow from the future and resupply shorts of short inventories." The market started this nearly flat. Something changed it. It hasn't changed back. Steve Hanke

Mario Nawfal

50,112 Aufrufe • vor 2 Monaten

Commodity market guru Jeff Currie on the crisis in products refined from crude oil: “The product prices are what matters here. The crisis is here. It has arrived, and it's in the product prices, and it's not in the crude oil prices.”

Commodity market guru Jeff Currie on the crisis in products refined from crude oil: “The product prices are what matters here. The crisis is here. It has arrived, and it's in the product prices, and it's not in the crude oil prices.”

Steve Hanke

25,713 Aufrufe • vor 18 Tagen

Oil is down, and down big. The headlines make it sound obvious. Iran peace deal, supply normalizing, the war premium coming out. But the rest of the markets are saying something very different. The clean story makes sense. Iran deal appears, crude sells off. The fundamental value of oil is closer to 50 a barrel than 150. But if this were only supply normalizing, the oil curve would stay in backwardation. The market would still want barrels today. It is not. Backwardation is vanishing. The front of the curve is about 80 cents from contango. The three-month spread has collapsed from around 30 to just over 2. Contango is what a glut looks like in the futures market. And the curve is heading there fast. Then the IEA cut its 2026 demand growth forecast by about 700,000 barrels a day. It warned of a major supply overhang in 2027. That is not supply. That is demand breaking. Inflation markets agree. TIPS break-evens are collapsing. The 5-year is down about 40 basis points in a month, back near its weakest levels of the year. That is not a market afraid of inflation. It is a market pricing the oil shock as temporary and demand-destructive. The Treasury curve says the same. The 2-year jumped to about 4.2%. The 10-year barely moved. The 2s10s spread flattened to about 29 basis points. The front end is taking the Fed's hawkish dots seriously. The long end refuses to price growth. That is not an inflation signal. It is a policy-mistake signal. Because the Fed is looking at this exact setup and seeing inflation. Its dots moved up about half a point from March. A majority of the FOMC now thinks it might have to hike for oil. We have seen this movie. Trichet and the ECB hiked into weakness in 2008 and again in 2011, mistaking a commodity shock for real inflation. It was a disaster both times, and the markets told them so in advance. Here is what they keep missing. Oil is a relative price shock, not inflation. For it to become inflation you need it to spread. Wages chasing prices. Businesses with pricing power. Demand strong enough to absorb higher costs. None of that is happening. So falling oil is not automatically bullish. Cheaper oil because supply came back is good. Cheaper oil because the economy is breaking is not. The market is pricing both, and the curve is where the fight shows up. Oil down by itself is good news. Oil down with flattening curves, collapsing break-evens, and demand downgrades is something else entirely.

Oil is down, and down big. The headlines make it sound obvious. Iran peace deal, supply normalizing, the war premium coming out. But the rest of the markets are saying something very different. The clean story makes sense. Iran deal appears, crude sells off. The fundamental value of oil is closer to 50 a barrel than 150. But if this were only supply normalizing, the oil curve would stay in backwardation. The market would still want barrels today. It is not. Backwardation is vanishing. The front of the curve is about 80 cents from contango. The three-month spread has collapsed from around 30 to just over 2. Contango is what a glut looks like in the futures market. And the curve is heading there fast. Then the IEA cut its 2026 demand growth forecast by about 700,000 barrels a day. It warned of a major supply overhang in 2027. That is not supply. That is demand breaking. Inflation markets agree. TIPS break-evens are collapsing. The 5-year is down about 40 basis points in a month, back near its weakest levels of the year. That is not a market afraid of inflation. It is a market pricing the oil shock as temporary and demand-destructive. The Treasury curve says the same. The 2-year jumped to about 4.2%. The 10-year barely moved. The 2s10s spread flattened to about 29 basis points. The front end is taking the Fed's hawkish dots seriously. The long end refuses to price growth. That is not an inflation signal. It is a policy-mistake signal. Because the Fed is looking at this exact setup and seeing inflation. Its dots moved up about half a point from March. A majority of the FOMC now thinks it might have to hike for oil. We have seen this movie. Trichet and the ECB hiked into weakness in 2008 and again in 2011, mistaking a commodity shock for real inflation. It was a disaster both times, and the markets told them so in advance. Here is what they keep missing. Oil is a relative price shock, not inflation. For it to become inflation you need it to spread. Wages chasing prices. Businesses with pricing power. Demand strong enough to absorb higher costs. None of that is happening. So falling oil is not automatically bullish. Cheaper oil because supply came back is good. Cheaper oil because the economy is breaking is not. The market is pricing both, and the curve is where the fight shows up. Oil down by itself is good news. Oil down with flattening curves, collapsing break-evens, and demand downgrades is something else entirely.

Jeffrey P. Snider

32,892 Aufrufe • vor 3 Monaten

🇺🇸 Tucker: The oil market is clearly manipulated "There was a time this month, with the Strait basically still closed, when oil, as priced in the Brent crude market, was cheaper by a few cents per barrel than it was before the war started." Referring to the Iran war and repeated threats to the Strait of Hormuz, he argued oil prices should have surged far higher if they truly reflected supply and demand. Instead, financial markets are being driven by speculation, insider trading, and powerful interests. Source: Tucker Carlson / Writer: Monica

🇺🇸 Tucker: The oil market is clearly manipulated "There was a time this month, with the Strait basically still closed, when oil, as priced in the Brent crude market, was cheaper by a few cents per barrel than it was before the war started." Referring to the Iran war and repeated threats to the Strait of Hormuz, he argued oil prices should have surged far higher if they truly reflected supply and demand. Instead, financial markets are being driven by speculation, insider trading, and powerful interests. Source: Tucker Carlson / Writer: Monica

Mario Nawfal

76,953 Aufrufe • vor 2 Monaten

Oil prices rose nearly $3 a barrel after President Trump said the US is going to attack Iran 'very hard' if no peace deal is finalized and as market data showed a larger-than-expected drawdown in US crude inventories

Oil prices rose nearly $3 a barrel after President Trump said the US is going to attack Iran 'very hard' if no peace deal is finalized and as market data showed a larger-than-expected drawdown in US crude inventories

Reuters

53,264 Aufrufe • vor 3 Monaten

🇺🇸 "90% of the spot market is overseas. 80% of the digital asset futures market is overseas," said Sen. Lummis this week. "I' don't know if they understand how significant this would be if the CLARITY act failed and we allowed this industry... to grow overseas," Lummis adds.

🇺🇸 "90% of the spot market is overseas. 80% of the digital asset futures market is overseas," said Sen. Lummis this week. "I' don't know if they understand how significant this would be if the CLARITY act failed and we allowed this industry... to grow overseas," Lummis adds.

Bitcoin.com News

289,079 Aufrufe • vor 2 Monaten

Get out of the stock market. A few companies control all the money in the world. BlackRock. Vanguard. Blackstone. They know when the bubble bursts. You don't. They pump. You buy. They dump. Oil futures are the proof. The Strait of Hormuz has been closed for three months. Oil should be at $200. It is not. The market is rigged. The house always wins. Get out.

Get out of the stock market. A few companies control all the money in the world. BlackRock. Vanguard. Blackstone. They know when the bubble bursts. You don't. They pump. You buy. They dump. Oil futures are the proof. The Strait of Hormuz has been closed for three months. Oil should be at $200. It is not. The market is rigged. The house always wins. Get out.

Predictive History

289,809 Aufrufe • vor 2 Monaten

BARTIROMO: Do you think oil prices will be lower before the midterm elections? BESSENT: Ahh -- I think oil prices, we can see in the futures market that oil prices are already lower 3 months, 6 months, 9 months out (Not a yes!)

BARTIROMO: Do you think oil prices will be lower before the midterm elections? BESSENT: Ahh -- I think oil prices, we can see in the futures market that oil prices are already lower 3 months, 6 months, 9 months out (Not a yes!)

Aaron Rupar

231,190 Aufrufe • vor 4 Monaten

Fuel Hike: There Is A Greater Pull On Demand Because Supply Has Been Constrained, Leading To Increased Prices — Sowunmi Crude oil is a commodity, which means it is fungible and has a uniform price all over the world with a dollar or two difference. To that extent, there is a limit to which any government can determine the price of crude oil, so pricing is dependent on international market forces. One of the factors of that market forces is the ongoing war between Iran and the U.S. The fight has cause there to be a blockade on the Strait of Hormuz. Close to 25% of global crude oil passes through there, because of the blockade, one quarter of the available crude oil is not able to reach factors. Olabode Sowunmi Oil and Gas Expert

Fuel Hike: There Is A Greater Pull On Demand Because Supply Has Been Constrained, Leading To Increased Prices — Sowunmi Crude oil is a commodity, which means it is fungible and has a uniform price all over the world with a dollar or two difference. To that extent, there is a limit to which any government can determine the price of crude oil, so pricing is dependent on international market forces. One of the factors of that market forces is the ongoing war between Iran and the U.S. The fight has cause there to be a blockade on the Strait of Hormuz. Close to 25% of global crude oil passes through there, because of the blockade, one quarter of the available crude oil is not able to reach factors. Olabode Sowunmi Oil and Gas Expert

ARISE NEWS

41,395 Aufrufe • vor 14 Tagen

NEWS: Oil prices PLUMMETED this morning after the U.S. and Iran agreed to a peace deal Sunday, with crude oil crashing to $80 a barrel on news that the Strait of Hormuz will reopen. Gas prices are now expected to begin falling at the pump within days. Crude oil benchmarks dropped more than 5% in early trading. West Texas Intermediate (WTI) fell to around $80 per barrel — its lowest level in recent months — while Brent crude, the global benchmark, traded near $82–$84.

NEWS: Oil prices PLUMMETED this morning after the U.S. and Iran agreed to a peace deal Sunday, with crude oil crashing to $80 a barrel on news that the Strait of Hormuz will reopen. Gas prices are now expected to begin falling at the pump within days. Crude oil benchmarks dropped more than 5% in early trading. West Texas Intermediate (WTI) fell to around $80 per barrel — its lowest level in recent months — while Brent crude, the global benchmark, traded near $82–$84.

RedWave Press

20,884 Aufrufe • vor 3 Monaten

🚨🇺🇸🇮🇷 The futures market is trading as if peace is days away, but even if a deal is signed tomorrow, we are six months from any normalization of the oil supply. Stephen Schork says the globe has lost a billion barrels of oil since the blockade began. The tanker market is screaming shortage while futures traders react to Trump tweets. Those are two completely different realities. Declogging the Persian Gulf takes until end of year at best. Stephen Schork Azi

🚨🇺🇸🇮🇷 The futures market is trading as if peace is days away, but even if a deal is signed tomorrow, we are six months from any normalization of the oil supply. Stephen Schork says the globe has lost a billion barrels of oil since the blockade began. The tanker market is screaming shortage while futures traders react to Trump tweets. Those are two completely different realities. Declogging the Persian Gulf takes until end of year at best. Stephen Schork Azi

Mario Nawfal

135,867 Aufrufe • vor 3 Monaten

SECRETARY RUBIO: For the first time in decades, Venezuela is now selling their oil in the global market at full market price. The money is coming back to Venezuela and being spent for the benefit of the Venezuelan people. 💪

SECRETARY RUBIO: For the first time in decades, Venezuela is now selling their oil in the global market at full market price. The money is coming back to Venezuela and being spent for the benefit of the Venezuelan people. 💪

Department of State

537,824 Aufrufe • vor 6 Monaten