Active Month

The Active Month is the futures or swaps contract month experiencing the highest combination of liquidity, trading volume, and open interest. It forms the core point of price discovery in energy markets, particularly for crude oil, refined products, natural gas, and power where liquidity tends to cluster in the prompt months. Traders prioritise the Active Month due to its tighter bid–ask spreads, deeper order books, and enhanced execution efficiency. As expiry approaches, liquidity progressively transitions to the next contract month in a process widely known as the “roll.” Understanding this migration is essential for traders balancing front-month exposure, swap hedges, and calendar spreads. Commercial participants also track the Active Month closely when pricing physical cargoes, storage decisions, refinery runs, weather-driven demand, and regional supply dynamics. Because the Active Month reacts first and most sharply to shifts in fundamentals—such as outages, inventory data, pipeline constraints, LNG flows, and macroeconomic sentiment—it is a critical anchor for both speculative and hedging strategies. Monitoring which month is active ensures that execution aligns with prevailing market behaviour and that risk positions remain tied to the most representative barometer of current energy-market conditions.