What Is a “Futures Curve” and How Is It Constructed?

A futures curve is a graphical representation of the prices of futures contracts for a particular asset, plotted against their respective expiration dates. To construct the curve, you take the current market prices of all available futures contracts for an asset, from the nearest expiration date to the furthest.

The y-axis of the graph represents the price, and the x-axis represents the time to expiration. The resulting line or curve shows the market's expectation of the asset's price at various points in the future.

An upward-sloping curve is in contango, while a downward-sloping curve is in backwardation.