Contango

Contango is a term used in the futures market to refer to the situation where the price of a commodity for future delivery is higher than the current spot price. This results in an upward sloping forward value curve.

It is very common for non-perishable goods such as oil to be in contango as this merely reflects an expected increase in cost over time and also factors in carrying costs such as transportation and storage. However, if the contango greatly exceeds the spot price, producers and consumers will naturally turn to the spot market to meet their needs rather than the futures.