Deferred month

A deferred month refers to a futures or derivatives contract with a delivery or settlement date further in the future than the prompt or front month. In oil markets, deferred months are essential for trading the forward curve, managing storage economics, and expressing views on long-term supply and demand fundamentals. The price relationship between prompt and deferred months reveals market structure, such as contango or backwardation. Physical traders use deferred months to hedge future production, refinery output, or inventory holdings, while financial traders use them to speculate on curve movements or roll yields. Liquidity generally decreases as contracts move further out on the curve, which can widen spreads and increase execution costs. Deferred months are also central to calendar spread strategies, where traders buy one month and sell another to isolate time-based price risk. Understanding deferred months is critical for managing rollover risk and long-term exposure in oil portfolios.