In recent weeks Brent crude oil, the global oil benchmark, has shifted into backwardation – a state when spot prices are higher than prices for futures contracts, creating a downward-sloping curve for futures prices (see chart). This is essentially the opposite of a contango market (which has prevailed since 2014), when near-month futures sell at a discount to those expiring further out. The pivot to backwardation is notable for market participants for three key reasons: First, the move to backwardation from contango indicates that OPEC’s production quotas are having some success in reducing the overhang of ... (full story)