Backwardation - Financial definition
Financial acronyms
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Concise definition of the term backwardation
The term backwardation describes a market situation where spot prices are higher than forward prices.
Comprehensive definition of the term backwardation
This term is most commonly used in oil markets but are also in certain other commodities and energies markets. In oil markets, the prevailing condition may reflect immediate supply and demand. Thus, backwardation can indicate an immediate shortage. Anything that threatens the steady flow of oil around the world, such as imminent crisis or conflict, may drive the oil market into backwardation.
Opposite: contango