Oil’s Futures Curve Signals Renewed Supply Risk | Presented by CME Group

Summary

The video explains the difference between contango and backwardation in crude oil futures markets. It notes that by mid-July 2026 the curve had entered backwardation amid renewed Strait of Hormuz tensions, low inventory levels, and near-term supply disruption threats, following a brief flip into contango in late June.

• Explains contango as the normal state for crude oil futures, where later-dated prices are higher, reflecting storage and financing costs.
• Defines backwardation as front-month prices above later-dated contracts, typically occurring when physical supply is tight or disruption risks are high.
• Notes the crude oil curve was in backwardation as of mid-July 2026, driven by renewed concerns over the Strait of Hormuz, low inventories, and near-term supply risks.
• Mentions a brief flip to contango in late June that lasted only a few days before backwardation returned as tensions re-emerged.
• The piece highlights how futures curve shapes signal market expectations about physical oil availability and geopolitical risk premiums.