Commodity Prices From Futures Contracts

Crude oil, refined products and industrial metals based on front-month futures.

What Is Quoted Here

Crude oil, refined products and copper, each based on the front-month futures contract. WTI and Brent are two different crude oil benchmarks: WTI is priced at a US inland hub, while Brent is the seaborne North Sea benchmark used to price much of the world’s traded crude oil. Gasoline and heating oil are refined products. Their price spread to crude oil can move independently and may widen sharply when refining capacity is tight.

The Chart Is Not the Investment Return

A commodity investment rarely delivers the same return as the quoted commodity price because futures positions have to be rolled into the next contract before expiry. If the next contract is more expensive, the roll creates a cost; if it is cheaper, the roll generates a gain. Over a year, this roll effect can be larger than the change in the underlying commodity price.

On the roll date, the old and new contracts can also differ in price even though no corresponding spot-market move occurred. The series therefore chains the contracts across these roll gaps. Each daily change reflects the movement of the active contract, while the latest value is the actual settlement price. Earlier values can therefore differ from the price that was quoted at the time because the accumulated roll effects are reflected in the historical series.

What Drives Them

Supply is shaped by production decisions, weather, sanctions and shipping routes. Demand is driven largely by the business cycle. Copper is a classic economic indicator because it is widely used in construction, power grids and vehicles. For the portfolio perspective, see Commodities in a Portfolio .