However, investments in these types of derivative instruments bring terms such as contango and backwardation into the equation.

FORBES: Three Ways To Gain Exposure To Oil

Backwardation is the opposite of contango.

FORBES: Are Your Commodity ETFs On The Right Track?

Oil futures have been in contango since mid-May, in contrast to their usual state, known as backwardation, where prices continually drop from the current spot price.

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Contango involves a scenario where future prices for a given commodity are higher than spot prices whereas backwardation involves a scenario where future prices for a given commodity are lower than spot prices.

FORBES: Three Ways To Gain Exposure To Oil