We can take the oil futures markets as an example. Futures contracts are agreements to buy or sell a specified quantity of a commodity at a future date, at a price agreed upon when entering the contract, the futures price.
However, in regulated exchanges [such as NYMEX or ICE] these contracts are traded chiefly for hedging risk on price changes rather than for arranging physical delivery of oil. 14 Traditionally, these markets have been characterised, more frequently than not, by a market constellation of prices known as “backwardation”.