- A market contango, in which front month oil futures trade at lower prices than contracts further off into the future, reflects concerns about near-term oversupply. In other words, traders are not very enthusiastic about buying oil today, relative to the future, because there is too much oil floating around. - The contango widened to very sharp depths when oil prices crashed to multiyear lows, corresponding to moments when the markets grew acutely concerned about the glut. - But the contango has nearly disappeared since March and April as short-term supply disruptions in Canada and Nigeria erased the global supply overhang. - As Reuters notes, the markets have arrived back into balance, and the small contango of roughly $2 per barrel witnessed today is consistent with a relatively balanced market. Between 2005 and 2014, the average contango was $1.50 per barrel for WTI.