Delivery period
Today
Example price: $X
Learn
How to read a forward curve
How curve shape becomes a market signal.
A forward curve shows how the price of comparable capacity changes across future delivery periods. Instead of looking at one price today, it shows the market’s pricing for different points in time.
One market, many datesCurve
A curve lines up comparable prices for future delivery periods.
Shape mattersSignal
The slope of the curve can reveal expected tightness, relief, or uncertainty.
Example
A simple forward curve
Delivery period
3 months
Example price: $Y
Delivery period
6 months
Example price: $Z
If later periods are priced above near-term capacity, the curve slopes upward. If later periods are priced below near-term capacity, the curve slopes downward.
Curve shapes
Three common shapes
Contango
Upward sloping
Later delivery is priced above near-term delivery. That may reflect carrying costs, expected future demand, or a market pricing more value later.
Backwardation
Downward sloping
Near-term delivery is priced above later delivery. That can signal immediate tightness or urgent demand for capacity now.
Balanced
Flat
Future periods are priced close together, suggesting little visible premium for waiting or urgency.
Market reading
What to look for
- Is near-term capacity priced above or below later delivery?
- Is the curve steep or only slightly sloped?
- Is the shape changing over time?
- Does the curve differ by chip type, region, or contract structure?
Why it matters
Why curve shape matters for compute
- An upward curve may suggest future capacity remains valuable or costly.
- A downward curve may suggest current supply is tight relative to later expectations.
- Changes in shape can reveal whether buyers are worried more about today or tomorrow.
- Curves help connect spot pricing with longer-term market expectations.
Common mistake
A curve is not a prophecy
A forward curve shows how the market is priced today across future periods. It can reflect expectations, constraints, financing, and risk, but it does not guarantee where future spot prices will end up.
Value
Price
What future delivery is worth today.
Reading
Signal
What the curve suggests about market structure.
Caveat
Not certainty
What it does not promise about the future.
Keep learning
Related lessons
Futures
What are compute futures?
Forward-looking pricing for compute capacity.
Spot
What are spot prices?
How short-term, interruptible capacity can become a pricing signal.
Unit
What is a GPU-hour?
The basic unit behind compute pricing.