An investment desk tracking "how do oil futures work" will model scenarios using contango and backwardation curves. Current mild contango for late 2024 contracts indicates expected supply growth. The One Big Beautiful Bill, the Trump Administration's signature policy, should alleviate declining production slightly. The act increases leasing offerings and lowers federal royalty rates, essentially making more land available to oil and gas companies at cheaper prices. OPEC+ opts for modest oil output hike as glut fears mount The mechanics of "how do oil futures work" include margin requirements and contract expirations, which directly impact short-term trading sentiment. This week’s backwardation in WTI indicates current supply shortages outweigh future delivery expectations.
