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Forwardation


What does Forwardation mean?

A pricing situation in the futures market in which the spot price is lower than the futures price. The futures price of a commodity or currency is above the spot price for immediate delivery.

Futures Knowledge Explains Forwardation

In a forwardation situation forward prices exceed spot prices, so the forward curve is upward sloping. For example, if the spot price of oil is $65 and the futures price is $70 than the market is considered to be in forwardation. Backwardation is opposite of forwardation.



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