Market & routes
Contango
Meaning
Contango is when future oil prices are higher than today's price; the opposite, backwardation, is when future prices are lower.
Also written as Backwardation
Contango explained
Contango encourages storing oil, on land or on tankers, because it can be sold forward for more than it costs now. Backwardation encourages selling oil immediately, which tends to draw down inventories and increase prompt shipments.