u/Tough_Balance2253

I have heard that in normal market conditions the oil market is in contango due to inflation and storage costs. What this says to me is that disregarding market conditions, an oil future 12 months from now is expected to be always higher because someone needs to hold the product for 12 months (so the future is in regard to product already existing?)

If my above understanding is right, does the future market represent the expectation for oil price at all? If price today is $70 and a 12-month future is at $80, is the market actually expecting the price to be at $80 in a year? Or is the $10 premium merely the current inflation and storage cost?