What Is Curve Structure?
The futures curve plots the price of a commodity across different delivery months. The shape of this curve — whether it slopes up or down ��� is one of the most important signals in energy markets.
Backwardation: Front Month Higher Than Back
Backwardation occurs when near-term futures prices are higher than later months. It signals that the market needs oil NOW more than later — a supply scarcity signal.
Example: Apr 2026 Brent Crude
Front month: $118/bbl. Six months out: $95/bbl. The $23 backwardation signals acute physical scarcity from the Strait of Hormuz disruption.
Backwardation incentivizes drawing down inventories (sell now at high prices) and discourages storage (future prices are lower).
Contango: Front Month Lower Than Back
Contango occurs when near-term prices are lower than later months. It reflects storage costs, financing costs, and expectations of future tightening.
Example: Apr 2020 WTI
Front month: $20/bbl. Six months out: $32/bbl. Deep contango during the pandemic demand crash. Traders filled every storage tank to profit from the spread.
Term Slope: Measuring Severity
The term slope measures how steep the curve is, annualized as a percentage:
| Slope | Classification | Signal |
|---|---|---|
| < 1% | Flat | Balanced market |
| 1-3% | Mild | Slight imbalance |
| 3-8% | Moderate | Clear supply/demand skew |
| 8-15% | Steep | Significant stress |
| > 15% | Extreme | Crisis-level dislocation |
Who Uses Curve Structure?
Risk managers: Steep backwardation flags supply risk. Portfolio hedging strategies change based on curve shape.
Physical traders: Contango creates "cash and carry" arbitrage — buy physical, store it, sell futures at higher price.
Storage operators: Contango = profit from storage. Backwardation = empty the tanks.
Get Curve Structure via API
curl -H "Authorization: Token YOUR_KEY" \ "https://api.oilpriceapi.com/v1/spreads/curve-structure?commodity=ICE_BRENT" # Returns: structure (backwardation/contango), severity, # term_slope_pct, month spreads, human-readable signal
Available for ICE Brent, ICE WTI, ICE Gas Oil, NYMEX Natural Gas, and ICE TTF. Full API docs.