Contango vs Backwardation: Futures Curves, Roll Yield, Funding

March 11, 2026

8 minutes

Last Updated: September 15, 2026

Contango vs backwardation describes which way a futures curve slopes. In contango, later contracts cost more than spot; in backwardation, they cost less. On September 15, 2026, Deribit bitcoin futures were in contango at about 4.5% to 5.0% a year, while EIA data show WTI crude in backwardation on April 5, 2024, with the fourth contract $2.67 below the first.

The shape matters because it decides what time costs a position. A trader who holds a long position through several expiries pays for contango every time they roll and gains from backwardation. A hedger who sells futures earns in contango and gives up value in backwardation. Perpetual futures have no expiries and therefore no curve, but their funding rate carries the same information: a perpetual trading above its index pays funding from longs to shorts, much as a contango curve charges long rollers. Our perpetual swaps vs futures comparison explains how funding compares with basis. This guide compares the two states, shows where they came from in real markets, works through roll yield in dollars and explains how the same forces appear in gold, silver and oil perpetuals. Oil traders can start with our guide on how to trade oil futures, and EVEDEX contract terms are listed in the crypto derivatives overview.

Contango vs Backwardation: Side-by-Side Comparison

Criterion	Contango	Backwardation	On EVEDEX perpetuals (September 2026)
Curve shape	Later-dated futures trade above spot or above nearer contracts, so the curve slopes upward	Later-dated futures trade below spot or below nearer contracts, so the curve slopes downward	No expiries and no curve; the sign of the funding rate plays the same role
Usual cause	Cost of carry: financing, storage and insurance outweigh any benefit of holding the asset now	Scarcity now: tight inventories or urgent demand make immediate supply worth more	A perpetual above its index gets positive funding; below it, funding turns negative
Long position that rolls	Negative roll yield: each roll sells a cheaper expiring contract and buys a dearer one	Positive roll yield: each roll sells a dearer expiring contract and buys a cheaper one	No rolls; longs pay positive funding and receive negative funding, charged every hour
Short hedger	Earns the premium as later contracts converge down toward spot	Gives up value as later contracts converge up toward spot	Shorts receive positive funding and pay negative funding, calculated every 8 hours
Real example	Bitcoin on Deribit, September 15, 2026: all 11 expiries above the index	WTI on April 5, 2024: $86.91 front contract against $84.24 for the fourth contract	Tether Gold (XAUT), silver and WTI oil perpetuals with up to 100x leverage, trading 24/7
Extreme case	April 20, 2020: WTI front contract at −$37.63 while the second contract was $20.43	An HSBC analyst cited "extreme backwardation" in CME silver futures in the LBMA Forecast Survey 2026	Open interest on September 14, 2026: silver $17.2M, oil $16.5M and XAUT $14.0M
Worked example on $100,000 held to expiry, prices unchanged	Long BTC via the December 2026 future at a 1.3653% premium: about −$1,365	Long the fourth WTI contract at $84.24 rolling up to $86.91: about +$3,170, or 3.2%	A long paying an assumed 0.01% per 8 hours: $1.25 an hour, or about $30 a day

Data as of September 15, 2026. Bitcoin futures: Deribit, 11:52 UTC. WTI futures: EIA Contract 1, Contract 2 and Contract 4 daily settlements. Silver comment: LBMA Forecast Survey 2026. EVEDEX open interest: CoinGecko, September 14, 2026; leverage: EVEDEX trading terms, September 14, 2026; funding cadence: EVEDEX docs. The funding rate in the last row is an assumption.

What Causes Each Curve Shape

The standard way to price a future is cost of carry. Someone who sells a contract for delivery in three months could buy the asset today and hold it, so the futures price should cover what holding costs: financing the purchase, storing and insuring it, minus any income the asset pays. When those costs are positive and nothing is scarce, later contracts sit above spot, and the market is in contango.

Bitcoin shows the financing part in isolation because it costs almost nothing to store. On September 15, 2026, Deribit's bitcoin index stood at $76,892.98, and every listed future traded above it: 0.12% for September 25, 1.37% for December 25 and 3.85% for June 25, 2027. Annualized, the longer contracts sat between about 4.5% and 5.0%, a fairly flat price of time.

Backwardation needs a reason to want the asset now rather than later. For physical commodities, that reason is usually low inventory. Holders of oil, silver or grain in a shortage can earn more by selling now than by holding and hedging, which economists call a convenience yield. WTI's curve on April 5, 2024, the last day the EIA published daily NYMEX futures, sloped down from $86.91 for the first contract to $86.10, $85.20 and $84.24.

Storage can also push contango to extremes. On April 20, 2020, WTI's front contract settled at −$37.63 while the second contract was $20.43, the third $26.28 and the fourth $28.51. The EIA attributed the collapse to low liquidity and "the scarcity and high cost of available crude oil storage," with storage at Cushing, Oklahoma, 76% full by April 17. Holders of expiring contracts had nowhere to put the oil and paid others to take it. For how oil contracts work day to day, see the guide on how to trade oil futures.

Contango and backwardation price curves on a futures term structure chart

Worked Example: Roll Yield in Dollars

Roll yield is the gain or loss that comes from the curve's shape rather than from the spot price. Each example assumes $100,000 of long exposure and a curve that keeps its shape.

Contango, bitcoin. Buying Deribit's BTC-25DEC26 on September 15, 2026, at $77,942.78 against an index of $76,892.98 means paying a 1.3653% premium. If bitcoin is still at $76,892.98 on December 25, the contract settles there, and the position loses $100,000 × 1.3653% = $1,365. A holder of spot bitcoin would have lost nothing over the same period.
Backwardation, WTI. On April 5, 2024, a trader buys the fourth WTI contract at $84.24. If the curve holds its shape for three months, that contract becomes the front month and trades where the front month traded, $86.91. The gain from the roll alone is $86.91 ÷ $84.24 − 1 = 3.2%, about $3,170 on $100,000.
Extreme contango, WTI in 2020. On April 20, 2020, the second contract was $20.43 and the fourth $28.51. A long investor who kept rolling into later contracts at those prices was paying about 40% more for barrels two months further out, a cost that could erase gains even in a recovering oil price.

The same arithmetic runs in reverse for shorts. A producer hedging by selling futures in contango earns the premium, while in backwardation it locks in prices below today's.

How Perpetual Futures Reflect Contango and Backwardation

A perpetual contract collapses the curve into a single point and a funding rate. When traders pay up for long exposure, the perpetual trades above its index, funding turns positive and longs pay shorts, the perpetual version of contango. When the market leans short, or the underlying is in short supply, the perpetual can trade below its index, funding turns negative and shorts pay longs.

Two differences matter. First, funding is recalculated constantly, so a perpetual reflects the current mood rather than a price locked for months. Second, what the index tracks matters for commodities. A perpetual whose index follows a spot price does not pay the roll costs of a futures-based product directly, but its funding still responds to how traders position around scarcity or surplus. Read the contract specification to see which price an index follows before trading it. For the mechanics of funding against basis in more depth, see perpetual swaps vs futures.

How to Read and Trade the Curve

Compare like with like. Annualize the premium of each contract: divide by days to expiry and multiply by 365.
Check what drives the shape. Contango in bitcoin reflects financing demand; contango in oil can reflect a storage glut, and backwardation usually signals tight supply.
Know your roll schedule. A long product that rolls monthly in contango bleeds value even when spot is flat.
Watch funding on perpetuals. A persistent positive rate costs longs every hour on venues that charge hourly.
Expect the curve to change. WTI went from deep contango in April 2020 to backwardation in April 2024; no shape is permanent.

Gold, Silver and Oil Perpetuals on EVEDEX

EVEDEX lists three commodity perpetuals: XAUT, a contract on the Tether Gold token rather than on spot gold, silver (XAG) and WTI oil (CL). Each allows up to 100x leverage according to EVEDEX trading terms on September 14, 2026, and each trades 24/7. Trading the XAUT perpetual does not give you physical gold or XAUT tokens. On September 14, 2026, CoinGecko showed open interest of $17.2 million in silver, $16.5 million in oil and $14.0 million in XAUT. All EVEDEX pairs are perpetual contracts, so there is no futures curve to read: contango and backwardation show up only through funding, which is calculated every 8 hours and charged hourly. Fees are 0.015% maker and 0.045% taker, margin is USDT under cross margin, and the minimum order is 5 USDT.

Drawbacks for commodity traders: no dated futures to lock a roll price or build calendar spreads, no physical delivery, no spot metals or options, and 52 pairs in total. The overview of crypto derivatives on EVEDEX lists contract terms. Perpetual futures carry a high risk of loss.

FAQ

Contango is a market condition in which futures for later delivery trade above the spot price or above nearer contracts, so the futures curve slopes upward. On September 15, 2026, every Deribit bitcoin future traded above the index, from 0.12% for the September 25 contract to 3.85% for the June 25, 2027 contract, according to Deribit's API.

Backwardation is a market condition in which futures for later delivery trade below spot or below nearer contracts, so the curve slopes downward. EIA data for April 5, 2024, the last day it published NYMEX crude futures, show WTI in backwardation: $86.91 for the front contract, falling to $84.24 for the fourth contract.

Contango and backwardation are the two shapes of a futures curve. In contango, later contracts cost more than nearer ones; in backwardation, they cost less. The shape sets roll yield: rolling a long position loses value in contango and gains in backwardation. In perpetual futures, positive funding is the closest analog of contango and negative funding of backwardation.

Backwardation in futures markets appears when buyers pay more for immediate delivery than for later delivery, usually because inventories are tight. Long positions that roll then sell a dearer expiring contract and buy a cheaper one. On April 5, 2024, WTI's first contract settled $2.67 above its fourth contract, a 3.2% gap, according to EIA data.

Backwardation in the silver market means nearby silver futures or spot metal trade above later contracts, a sign that physical metal is scarce now. In the LBMA Forecast Survey 2026, HSBC analyst James Steel cited 'extreme backwardation on the CME futures markets' as support for higher prices. EVEDEX's silver perpetual had $17.2 million of open interest on September 14, 2026.

The EIA stopped publishing daily NYMEX futures prices after April 5, 2024, when WTI was in backwardation. Its September 2026 Short-Term Energy Outlook reports Brent averaging $91 per barrel in August and forecasts $74 for 2027 as inventories rebuild. A forecast is not the curve, so check current NYMEX settlements before trading.

Contango in oil markets happens when later-dated crude futures cost more than the front month, usually because oil is plentiful and storage is costly. The extreme case came on April 20, 2020: EIA data show WTI's front contract at −$37.63 while the second contract was $20.43, which the EIA linked to low liquidity and scarce storage at Cushing.

Traders profit from backwardation mainly through roll yield: a long futures position rolled each month sells the expiring contract high and buys the next one cheaper, gaining if the curve keeps its shape. On perpetual contracts, the equivalent is negative funding, which pays longs. Both gains disappear if the curve flips to contango or funding turns positive.

The opposite of contango is backwardation, a downward-sloping futures curve where later contracts trade below nearer ones. Bitcoin on Deribit was in contango on September 15, 2026, at about 4.5% to 5.0% a year, while WTI crude on April 5, 2024, was in backwardation, with the fourth contract $2.67 below the first.

Contango in finance describes futures prices that exceed spot because of the cost of carry: financing, storage and insurance minus any income from holding the asset. Bitcoin has no storage cost, yet Deribit futures on September 15, 2026, still priced carry at about 4.5% to 5.0% a year, which a buyer of the December contract paid as a 1.37% premium.