backwardation


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Related to backwardation: Contango, Normal backwardation theory

back·war·da·tion

 (băk′wər-dā′shən)
n.
A state in which the price of a futures contract is lower than the eventual or expected spot price of the underlying commodity or security.

backwardation

(ˌbækwəˈdeɪʃən)
n
1. (Stock Exchange) the difference between the spot price for a commodity, including rent and interest, and the forward price
2. (Stock Exchange) (formerly, on the Stock Exchange) postponement of delivery by a seller of securities until the next settlement period
Translations

backwardation

[ˌbækwəˈdeɪʃən] N (St Ex) → retraso m en la entrega de acciones; (= fee) → prima f pagada por retraso en la entrega de acciones
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References in periodicals archive ?
Goldman expects the oil markets' backwardation to strengthen further in second quarter 2018 as OECD stocks reach and remain at 5-year average levels.
On the one hand, the rapid rotation from contango into backwardation in the Brent crude oil market has effectively helped increase Opec revenues.
n other major commodities, when supply has patently swamped demand - see Brent crude oil futures roughly between Q3 2014 and Q3 2017 - the forward curve reacted swiftly, moving from backwardation to contango.
The return to backwardation in the Brent crude oil prompt spread - first futures month trading higher than the next - has helped push Brent's premium over WTI back up to levels last seen in December 2015.
JBC Energy said in a note on April 25 that a return of $60 for a barrel of Brent "does not look unreasonable," and it could coincide with a return of backwardation in the market.
Although in the near term, all oil markets remain in contango, even after the OPEC and non-OPEC decision, the first signs of backwardation were visible in the futures curve, as summer 2017 contracts are trading above 2018 strip average.
Backwardation -- When the future price is less than the spot price
In fact, Brent front month timespreads have already strengthened in the last three months and could briefly flip into backwardation this summer.
In short, we will get up close and personal with contango and backwardation, and evaluate the effect each has on this type of security.
The paper examines the impact of oil price volatility, the behavior of the Organization of Petroleum Exporting Countries (OPEC), and the volatility of the US Dollar exchange rate on the backwardation of crude oil futures during 1995 and 2006.
The premium for prompt cargoes, a market structure known as backwardation, influences the level at which Middle East exporters including Saudi Arabian Oil Co set official monthly prices for buyers in Asia, according to industry consultants KBC Energy Economics and JBC Energy.
For each commodity, the index rolls into the futures contract that shows the most backwardation or least contango, selecting from those contracts with nine months or fewer until expiration.