Contango/Backwardation in oil?

Discussion in 'Energy Futures' started by crgarcia, Feb 27, 2008.

  1. backwardation = bullish
    Contango= bearish
     
  2. In the very short term?
    Why?
     
  3. Backwardation is a market condition where spot prices exceed forward prices. Contango is the opposite condition, where forward prices exceed spot prices.
    the prevailing condition reflect immediate supply and demand. If crude oil is in contango, it may indicate immediately available supply. Backwardation can indicate an immediate shortage. Anything that threatens the steady flow of oil around the world, tends to drive the oil market into backwardation.