Contango

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Clusterstock  Nov 17  Comment 
Disciplined Investor conveniently charts the latest performance for both United States Natural Gas (UNG), and the Natural Gas Futures many use it as a proxy for. We previously discussed how contango (higher prices for longer-dated futures...
Index Universe  Nov 3  Comment 
  Source, a London-based issuer of exchange-traded funds (ETFs) and commodities (ETCs), has launched a new oil tracker product which aims to provide a stronger correlation to the price of spot oil by reducing the effects of contango. The...
Metal Bulletin  Oct 27  Comment 
Steel futures fell slightly in China on Tuesday after sharp gain last session, although spot prices advanced thanks to healthy demand.
OilVoice  Oct 23  Comment 
Contango Oil amp Gas Company announces that the Companys whollyowned subsidiary Conterra Company Conterra has entered into a joint venture with Patara Oil amp Gas LLC a privately held oil
Upstream Online  Oct 22  Comment 
A subsidiary of Contango Oil & Gas had agreed to a joint venture with privately-held Patara Oil & Gas for a drilling programme targeting the Cotton Valley gas play in Panola County, Texas.
Upstream Online  Oct 7  Comment 
US junior Contango Oil & Gas said it will spud prospects on five lease blocks won at the state of Texas lease sale before the end of the fiscal year.
Hard Assets Investor  Sep 28  Comment 
What really drives returns for commodity ETFs? It’s all a matter of composition, contango and compounding. Four common commodity ETFs side by side What’s oil got to do with it? Contango strikes again   It seems all of my end-of-summer...
Bloomberg  Sep 16  Comment 
(Update1) Astmax Co., manager of Japan’s two best-performing commodities funds, is topping Jim Rogers, Standard & Poor’s and all its rivals by buying futures with the lowest replacement costs.
Hard Assets Investor  Sep 10  Comment 
Real-time Monetary Inflation (last 12 months): 1.3% October crude oil was slightly higher overnight after Wednesday's price action ticked above the contract's four- and 10-day moving averages. The market was buoyed, in part, by an upward revision...
Commodity Online  Sep 7  Comment 
Market participants interpreted the rise in inventories as oversupply which in turn pressured front month futures downward. This contributed to the further widening of the contango.
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This article refers to a futures concept. For the oil & gas company, see Contango Oil & Gas Company (MCF).

Contango means the price of a commodity for delivery at a future date is significantly higher than the current or "spot" price, which makes it profitable for companies to store the commodity and enter into contracts to sell futures contracts on the commodity, even after accounting for storage costs and opportunity cost of capital (i.e. money tied down on the inventory not earning a return).

The situation persists untill the futures prices come down or current prices go up or the cost of storage becomes very high.

This situation is also referred to as an upward sloping forward curve.

The opposing market condition to contango is backwardation.

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