Contango and backwardation are terms used in certain energy and commodity markets to describe the shape of the forward curve. They are used especially in the crude oil market.

Contango is a condition where forward prices exceed spot prices, so the forward curve is upward sloping. Backwardation is the opposite condition, where spot prices exceed forward prices, and the forward curve slopes downward.

In oil markets, the prevailing condition may reflect immediate supply and demand. If crude oil is contango, this may indicate immediately available supply. Backwardation can indicate an immediate shortage. Anything that threatens the steady flow of oil around the world, such as imminent war, tends to drive the oil market into backwardation.