Key Commodity Markets and Instruments
Commodity futures are highly specific instruments. Two contracts on the same commodity can differ in grade, delivery location and settlement, and those differences are the whole content of many trading strategies.
The contracts worth knowing
Crude oil. WTI (NYMEX) delivers at Cushing, Oklahoma; Brent (ICE) is seaborne and cash settled against a North Sea index. Both are 1,000 barrels per contract. The WTI-Brent spread is one of the most actively traded relationships in commodities and reflects US inland logistics against global seaborne supply.
Natural gas. Henry Hub, 10,000 million British thermal units. Extremely volatile because storage is constrained and demand is weather-driven.
Gold. COMEX, 100 troy ounces. Behaves more like a financial asset than a commodity, with negligible consumption and a curve driven almost entirely by interest rates.
Grains. CBOT corn, wheat and soybeans, 5,000 bushels each. Strongly seasonal around planting and harvest.
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