Energy commodities are raw materials and resources used to produce power, heat, and fuel that are bought and sold on global markets. They include familiar resources like crude oil, natural gas, and coal, along with newer entries like electricity and carbon credits. These commodities form one of the largest and most actively traded sectors in global finance, and their prices ripple through virtually every part of the economy, from the cost of filling your gas tank to your monthly electric bill.
The Main Types of Energy Commodities
Energy commodities fall into two broad categories: depletable (finite) and renewable. In practice, depletable fossil fuels dominate. In the United States, roughly 92% of total energy consumed has historically come from depletable resources, with only about 8% from renewables like hydroelectric and biomass. Globally, that balance is shifting, with renewables now accounting for the largest share of growth in total energy supply at 38%, followed by natural gas at 28%, coal at 15%, oil at 11%, and nuclear at 8%.
The core energy commodities traded on exchanges are:
- Crude oil, measured in barrels (42 gallons each)
- Natural gas, priced per million British thermal units (MMBtu)
- Coal, traded by the metric ton
- Electricity, priced per megawatt-hour (MWh)
- Refined petroleum products like gasoline, diesel, and heating oil
Carbon credits and green hydrogen are emerging additions. Green hydrogen, produced using renewable energy, is being developed as a tradeable clean energy resource. When carbon emission prices reach roughly $86 to $105 per ton, some models suggest hydrogen could even become cost-free for end users through credit subsidies. Neither has reached the trading volume of traditional energy commodities yet, but both are gaining traction in commodity markets.
Crude Oil: The Biggest Energy Commodity
Crude oil is the most widely traded energy commodity in the world, and two benchmark grades set prices for nearly all global oil transactions. Brent Crude refers to a blend produced from oil fields in the North Sea between Norway and the United Kingdom, specifically the Brent, Oseberg, Forties, and Ekofisk fields. It serves as the pricing benchmark for roughly two-thirds of internationally traded oil, covering markets across Africa, Europe, and the Middle East. Brent trades on the Intercontinental Exchange (ICE) and tends to be sensitive to political tensions in the Middle East, which can threaten supply routes.
West Texas Intermediate (WTI) is produced primarily in Texas, New Mexico, North Dakota, and Montana. It is slightly lighter and sweeter than Brent, meaning it contains less sulfur and is somewhat easier to refine into gasoline. WTI trades on the New York Mercantile Exchange (NYMEX) and uses Cushing, Oklahoma as its physical delivery and price settlement point. WTI is the primary benchmark for U.S. oil markets. One barrel of U.S.-produced crude oil contains about 5.69 million British thermal units of energy.
Natural Gas and Coal
Natural gas is the second most actively traded energy commodity. In the United States, Henry Hub in Louisiana serves as the key pricing benchmark. Prices are quoted in dollars per million British thermal units (MMBtu), and they can swing dramatically. In early 2025, the Henry Hub spot price averaged $7.72/MMBtu in January, up sharply from $4.26/MMBtu in December. The U.S. produces roughly 110 billion cubic feet per day of dry natural gas, making it one of the world’s largest producers.
Natural gas prices are particularly volatile because the fuel is harder to store and transport than oil. Seasonal demand for heating in winter and cooling in summer creates regular price swings, and supply disruptions from weather events or geopolitical tensions can cause rapid spikes.
Coal, traded by the metric ton, remains significant in global energy markets despite declining use in many Western countries. Thermal coal (used for electricity generation) and metallurgical coal (used in steelmaking) are traded separately, with different price benchmarks depending on the region.
Electricity as a Commodity
Electricity is unusual among energy commodities because it cannot be stored in large quantities. It is classified as a “flow” commodity rather than a traditional “cash and carry” commodity, which makes its pricing characteristics more complex. You can’t warehouse electricity the way you can fill a tank with oil or pack coal into a railcar.
Electricity contracts are priced in dollars per megawatt-hour (MWh). Standard futures contracts use a delivery rate per on-peak hour of every on-peak day in a given month. Because electricity must travel through regional grid systems, prices vary significantly by location. Moving power across the grid creates what traders call basis risk, the possibility that prices at one delivery point differ substantially from prices at another.
Where Energy Commodities Are Traded
Most energy commodity trading happens on a handful of major exchanges. In the United States, the CME Group owns four exchanges: the Chicago Mercantile Exchange, the Chicago Board of Trade, the New York Mercantile Exchange (NYMEX), and COMEX. NYMEX is the most important venue for energy futures, handling crude oil, natural gas, and refined product contracts.
The Intercontinental Exchange (ICE), established in Atlanta in 2000, originally focused on energy commodities and has since expanded into soft commodities, foreign exchange, and equity futures. ICE is where Brent Crude futures trade, making it a central hub for international oil pricing.
Spot Markets Versus Futures
Energy commodities trade in two distinct ways. The spot market (also called the cash or physical market) is where actual physical commodities change hands for near-immediate delivery. If a refinery needs crude oil this week, it buys on the spot market.
The futures market, by contrast, involves contracts for delivery at a set date in the future. A natural gas futures contract for March delivery, for example, locks in a price today for gas that will be delivered months later. This allows producers and buyers to hedge against price swings. As a futures contract approaches its expiration date, its price tends to converge with the spot price, since at that point the two become functionally identical. The gap between futures and spot prices, known as basis, is a key concept for anyone trading or tracking energy markets.
What Drives Energy Prices
Energy commodity prices respond to a mix of supply, demand, and geopolitical forces. In the second quarter of 2025, energy prices were notably volatile due to concerns about global economic growth combined with geopolitical tensions in the Middle East. After Israeli strikes on Iran in June 2025, crude oil prices jumped on fears that regional oil production could be disrupted or the Strait of Hormuz could be closed, a chokepoint for a significant share of global oil shipments.
Seasonal patterns also play a major role. Refinery utilization peaks in summer as facilities maximize gasoline production to meet driving-season demand. Natural gas prices tend to spike in winter when heating demand surges. Inventory levels matter too: when gasoline or diesel stockpiles run low, prices rise. In early 2025, East Coast gasoline inventories were higher than the previous three years, helping keep prices in check, while above-average diesel exports drew down distillate inventories and pushed diesel margins higher.
Government policy decisions, OPEC+ production agreements, weather events, and shifts in industrial activity all feed into the equation. Because energy touches every sector of the economy, from transportation to manufacturing to agriculture, even small price changes in crude oil or natural gas can cascade into the cost of goods and services you encounter daily.
How Energy Is Compared Across Fuels
Since different energy commodities are measured in different units (barrels, cubic feet, metric tons, megawatt-hours), analysts use common conversion units to compare them. The most widely used in the United States is the British thermal unit (Btu), a measure of heat energy. Other common comparison units include barrels of oil equivalent, metric tons of oil equivalent, metric tons of coal equivalent, and terajoules. These conversions let you compare, for instance, how much natural gas it takes to produce the same energy as a barrel of crude oil, which is essential for evaluating fuel costs across industries.