Source: https://mochatrade.com/learn/glossary/contango-and-backwardation

# Contango and backwardation
URL: https://mochatrade.com/learn/glossary/contango-and-backwardation
Last modified: 2026-10-17

Contango is later futures months priced above nearer ones, the normal state when storage costs money; backwardation is the reverse, when the market wants the commodity now. A long rolling in contango sells cheap and buys dear each month, which is how [an oil fund loses while oil goes nowhere](https://mochatrade.com/learn). Watch [the front Brent month against the six-month](https://mochatrade.com/blog/crude-oil-war-and-slippery-slopes), and [who is forced to roll](https://mochatrade.com/learn/us-market-structure/who-moves-us-stocks).

## Related terms

- Commodity ETF: https://mochatrade.com/learn/glossary/commodity-etf
- Crude oil (WTI vs Brent): https://mochatrade.com/learn/glossary/crude-oil
- Oil risk premium: https://mochatrade.com/learn/glossary/oil-risk-premium
- Contract rollover: https://mochatrade.com/learn/glossary/contract-rollover
- Hedging: https://mochatrade.com/learn/glossary/hedging
- Short squeeze: https://mochatrade.com/learn/glossary/short-squeeze

Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.