An oil price Contango is likely to indicate an increased demand
for tankers for floating storage.
A market is in Contango when the front months cost less than the deferred months.
Backwardation" and"Contango" are two terms used to describe
the relationship between expected future spot prices and actual futures prices.
With gold, the months further out nearly always have higher prices,
a situation known in the commodities trade as Contango.
With gold, contracts on the months further out nearly always have higher prices,
a situation known in the commodities trade as"Contango".
If a bushel of corn in May costs 600'0 and a bushel of corn in July is 610'0,
that market is in Contango.
The Contango, which was at about $1 per million British thermal units(mmBtu)
last month, has since narrowed to about 50 cents or less, traders said.
Unlike Brent and West Texas Intermediate, the two largest global crude benchmarks,
the Dubai market is in Contango, where prices for later-dated cargoes are
higher than those for immediate delivery.
Benchmark Brent prices have risen by around $20 per barrel, or almost 50 percent, since the production cuts were announced,
and futures prices have swung from Contango into backwardation.