We chain the consecutive 1-month spreads on a single day to rebuild the relative shape of the curve. Drag through time — it opens on 2020-04-21, the deepest super-contango in history, the day WTI printed −$37.63.
Average |spread| widens monotonically with tenor — the cost of carry stacks. Mean spread by tenor, from our 421-spread universe:
Average 1-month spread by front-month. M1–M2 runs weakest (contango) Mar–Apr (refinery turnarounds, pre-driving) and strongest (backwardation) Jun–Jul (peak driving demand, Cushing draws).
Contango can't run deeper than the full cost of carry, or storage arb closes it:
Spread below the floor = crisis regime, not a mean-reversion buy. When contango > carry: buy front, store, sell back, lock it.
Each point is one delivery month; the line is the cumulative sum of the consecutive 1-month spreads, i.e. the curve's relative level. A line sloping down = backwardation (front months priced higher = scarcity). A line sloping up = contango (deferred months priced higher = glut + storage). The steeper it tilts, the stronger the regime — and the more a calendar spread is worth.