Forward thinking for backwardation

In certain settings it's reasonable to assume that the current futures price embodies the market expectations of the spot price. However, as Gary Dorris, Sean Burrows and Vena Kostroun explain, there are distinct situations when this assumption does not apply - they examine the consequences for natural gas futures prices

A common assumption among energy operators and risk managers is that today's futures price embodies the market expectations of the spot price in the future. The standard practice for risk managers is the use of the current futures market to calculate mark-to-market (MTM) and value-at-risk (VAR). While we would not question this conventional use of forward curves, it should be noted that the