The opposite of a contango is backwardation . Backwardation implies that oil in storage will be worth less later, even if holding it were cost-free. The situation, therefore, creates an incentive for companies to reduce their stocks, which adds supply to the market and helps to correct the indicated shortfall. There are many other situations that also cause companies to adjust their discretionary stocks because the risk, although not as low as it can be with building on a contango, is judged to be much lower than the potential reward. In all three case, stocks can be viewed as a buffer that enables a company to change the timing of its purchases, with the high probability that this will lower its costs and, therefore, improve its bottom line.
Consumers sometimes do the same thing.
For example, if the tax on gasoline at the pump is expected to increase on January 1 st , motorists rush in on December 31 st and buy early.