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Backwardation and Contango
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ShareThe following futures markets are in Backwardation, meaning they have a postiive roll return so ETF investors in these commodities are not penalized when the fund rolls over its futures contract to the next month. Moreover when a futures market is in backwardation it is a bullish signal, since it usuall means that there is strong demand coupled with low supply for that particular commodity.
Therefore investors would do well buying commodity ETFs in which the underlying futures market is in backwardation and selling commodity based ETFs where the futures market is in contango.
Futures Markets currently in Backwardation
1) Natural Gas (UNG)
2) Gasoline (UGA)
3) Gold (GLD)
4) Silver (SLV)
Futures Markets currently in Contango
1) Heating Oil (UHN)
2) Crude Oil (USO)
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| Market Summary | May 26, 2012 15:35 pm ET |
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