Cotango - Oil Futures
From the Houston Chronicle: "In contango, long-term futures contracts are priced higher than short-term ones. In other words, traders are betting that prices will rise during the next couple of years. * * * For example, crude for January delivery closed Friday at $33.87 a barrel on the New York Mercantile Exchange. For June delivery, the price was $50.05, and the price increases for later months. It was $55.97 for January 2010 and $62.63 for January 2011.”
The article points out that it may help smooth volatility as the price rises in the future.
