Finance glossary
Backwardation
Definition
When the current spot price trades above longer-dated futures.
Backwardation describes a market where near-term futures trade above longer-dated ones, often signaling tight current supply or strong immediate demand. Investors rolling contracts in backwardation can gain value over time. It is the opposite of contango.
In a sentence
Tight supply pushed crude into backwardation, with the spot price above later-dated futures.
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