# Commodities Trading

> How to trade commodities: futures, ETFs and producer stocks, what moves oil, gold and grains, key reports to watch, costs and the risks of commodity trading.

Source: https://learn.tradelabsai.com/markets/commodities-trading/  
Track: Markets and Instruments · Level: Beginner · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Commodities Trading", https://learn.tradelabsai.com/markets/commodities-trading/

Commodities trading means speculating on the prices of raw materials: energy like crude oil and natural gas, metals like gold and copper, and agricultural products like corn, wheat and coffee. Commodities often trend strongly because they respond to physical supply and demand, weather and global growth. They can also be extremely volatile around reports and supply shocks.

## Ways to trade commodities

| Method | How it works | Good for | Watch out for |
|---|---|---|---|
| Futures | Trade standard contracts on exchanges | Active traders; direct exposure | Leverage, expiry, rolling |
| Micro futures | Smaller versions of popular contracts | Smaller accounts | Same mechanics, smaller size |
| ETFs and ETCs | Funds holding futures or physical metal | Stock account traders | Roll costs in futures based funds |
| Producer stocks | Shares of miners, oil companies, farmers | Indirect exposure | Company specific risk |
| CFDs | Contracts with a broker (outside the US) | Small size, easy shorting | Financing costs, counterparty risk |

## What moves the main commodities

- **Crude oil:** global growth, production decisions by OPEC and its allies, US shale output, weekly inventory data and geopolitics. See [Crude Oil](https://learn.tradelabsai.com/commodities/crude-oil/).
- **Natural gas:** weather above all, plus storage levels and export demand. See [Natural Gas](https://learn.tradelabsai.com/commodities/natural-gas/).
- **Gold:** real interest rates, the US dollar, central bank buying and demand for safety. See [Gold](https://learn.tradelabsai.com/commodities/gold/).
- **Copper:** manufacturing and construction, especially in China. See [Copper](https://learn.tradelabsai.com/commodities/copper/).
- **Grains:** weather in growing regions, planting and harvest progress, and exports. See [Agricultural Markets](https://learn.tradelabsai.com/commodities/agricultural-markets/).

## Key scheduled reports

| Report | Market | When |
|---|---|---|
| EIA Weekly Petroleum Status Report | Crude oil, gasoline | Usually Wednesdays |
| EIA Natural Gas Storage Report | Natural gas | Usually Thursdays |
| USDA WASDE (supply and demand estimates) | Grains, softs, livestock | Monthly |
| CFTC Commitments of Traders | All futures | Weekly, Fridays |

Prices can move several percent within seconds of these releases. Many traders avoid entering just before them or reduce size.

## A worked crude oil trade

**Example: Micro crude oil futures**
Micro WTI crude oil futures cover 100 barrels, so $0.01 is worth $1.
**Account:** $10,000, risk 1% = $100.
**Setup:** oil rallies, pulls back to a prior breakout level at $78.00 and holds.
**Entry:** buy at $78.20. **Stop:** $77.20, $1.00 below = $100 per contract. Size: 1 contract.
**Target:** $80.70 for a $250 gain, 2.5 times the risk.

## Contango, backwardation and ETFs

Commodity futures for later months often trade at different prices from nearby months. Funds that hold futures must keep rolling into later contracts, which in a [Contango](https://learn.tradelabsai.com/futures/contango/) market tends to reduce returns compared with the spot price. That is why an oil ETF can lose value over a year in which the spot oil price ends flat. Understand a fund's structure before holding it for long periods. See [Roll Yield](https://learn.tradelabsai.com/futures/roll-yield/).

## Seasonality

Many commodities have seasonal tendencies: heating demand for natural gas in winter, gasoline demand in summer driving season, and grain prices around planting and harvest. Seasonality is a tendency, not a rule, and weather can overwhelm it. See [Seasonality in Commodities](https://learn.tradelabsai.com/commodities/seasonality-in-commodities/).

## Risks

- **Volatility and gaps** around reports and geopolitical news.
- **Leverage** in futures and CFDs.
- **Physical delivery** if futures are held into delivery periods. See [Physical Delivery vs Cash Settlement](https://learn.tradelabsai.com/futures/physical-delivery/).
- **Extreme events:** in April 2020, the expiring WTI crude oil contract briefly settled below zero as storage filled.

## Frequently asked questions

### What is the easiest commodity to trade for beginners?

Gold and crude oil are popular because they are liquid and well covered by news, and both have micro futures and ETF options.

### Can I trade commodities without futures?

Yes, through ETFs, producer stocks or, outside the US, CFDs, each with its own trade offs.

### Why are commodities so volatile?

Supply cannot adjust quickly, demand changes with the economy, and weather or political events can suddenly change expected supply.

## Sources

- U.S. Energy Information Administration, [Weekly Petroleum Status Report](https://www.eia.gov/petroleum/supply/weekly/)
- USDA, [WASDE report](https://www.usda.gov/oce/commodity/wasde)

## Continue learning

- Next lesson: [Bond Trading](https://learn.tradelabsai.com/markets/bond-trading/)
- Previous lesson: [Crypto Trading](https://learn.tradelabsai.com/markets/crypto-trading/)
- Related: [Crypto Trading](https://learn.tradelabsai.com/markets/crypto-trading/): How crypto trading works: exchanges, spot vs perpetual futures, wallets, 24/7 markets, fees, volatility and risk management, with a worked Bitcoin trade.
- Related: [What Are Commodities?](https://learn.tradelabsai.com/markets/what-are-commodities/): Commodities are raw materials like oil, gold and wheat. Learn the main commodity groups, what drives their prices, how they are traded and the risks involved.
- Related: [Commodity Market Fundamentals](https://learn.tradelabsai.com/commodities/commodity-market-fundamentals/): Commodity prices are driven by physical supply and demand, inventories, the dollar and weather. Learn the main sectors, key drivers, participants and data.
- Related: [Crude Oil](https://learn.tradelabsai.com/commodities/crude-oil/): Crude oil is the world's most traded commodity. Learn WTI vs Brent, the futures contracts, OPEC+, shale, inventory reports and how traders approach oil.
- Related: [Gold](https://learn.tradelabsai.com/commodities/gold/): Gold is a safe haven and inflation hedge driven by real rates, the dollar and central banks. Learn gold futures, ETFs, key drivers and how traders approach gold.
- Related: [Futures Trading](https://learn.tradelabsai.com/markets/futures-trading/): How futures trading works day to day: choosing contracts, margin, tick values, trading hours, rolling, costs and risk, with a worked Micro E-mini trade.
- Related: [Contango](https://learn.tradelabsai.com/futures/contango/): Contango is when later futures trade above nearer ones or spot. Learn why it happens, how it erodes long commodity and VIX funds, and how traders use it.