Overview
The spot price is the current market price at which a commodity, security, or currency can be bought or sold for immediate (T+0 to T+2) settlement and physical delivery. It stands in contrast to the futures price, which reflects delivery at a future date.
How Spot Prices Are Determined
- Commodity Exchanges: Major exchanges publish real-time spot benchmarks. WTI crude oil spot prices are set at Cushing, Oklahoma (CME/NYMEX). Gold spot is fixed twice daily in London by the LBMA Gold Price (since 2015, replacing the century-old London Gold Fix).
- OTC Markets: Many commodities trade via over-the-counter bilateral contracts. Natural gas spot at Henry Hub, Louisiana serves as the benchmark for U.S. gas markets.
- Currency Markets: In forex, the spot rate for major pairs settles T+2. The daily $7.5 trillion forex market (BIS 2022 Triennial Survey) is predominantly spot-driven.
Key Factors Influencing Spot Prices
- Supply disruptions: The 2022 Russia-Ukraine war drove Brent crude spot above $130/barrel in March 2022
- Seasonal demand: U.S. natural gas spots peak in winter heating season โ Henry Hub reached $9.68/MMBtu in August 2022
- Inventory levels: EIA Weekly Petroleum Status Report directly moves oil spot prices
- Geopolitical events: Gold spot surged past $2,000/oz after Russia's 2022 invasion; hit $2,450 in May 2024
Spot vs. Forward/Futures
When spot > futures = backwardation (supply tightness). When futures > spot = contango (carrying costs). The basis (futures โ spot) is a critical metric for commodity traders.