Commodities
Commodities are the basic, interchangeable goods that form the foundation of global commerce and industrial production. They are tangible, raw materials or primary agricultural products that can be bought, sold, and traded on exchanges. As real assets, they represent a direct claim on physical resources, offering unique portfolio characteristics distinct from financial assets like stocks and bonds.
Sentinel Capital Research
Core Characteristics
• Standardized & Fungible: One unit is essentially equivalent to another (e.g., a barrel of West Texas Intermediate crude oil,
a bushel of #2 yellow corn).
• Traded on Global Markets: Prices are set by global supply and demand dynamics on
exchanges like the CME Group or ICE.
• Physical Underpinning: While often traded via futures contracts, they are ultimately
deliverable as physical goods.
• High Volatility: Prices are highly sensitive to geopolitical events, weather,
supply chain disruptions, and macroeconomic cycles.
The Four Main Categories
1. Energy (The Engine of Modernity)• Examples: Crude Oil (Brent, WTI), Natural Gas, Gasoline, Heating Oil.
• Drivers: Geopolitics (OPEC+ decisions), global economic growth, inventory levels, technological shifts (fracking, renewables), and transportation demand.
• Role: The most economically sensitive commodity sector, often seen as a barometer for global industrial activity.
