- Supply chain bottlenecks have caused shortages in the global economy this year, causing commodity prices to skyrocket.
- The rise in prices, especially energy, was as much a reflection of surging demand as of insufficient supply.
- Insider has compiled a list of the 10 best performing commodities in 2021.
- Sign up for our daily newsletter here, 10 things before the opening bell.
Commodities were among the most volatile asset classes in 2021, with soaring inflation and supply chain disruptions sending prices into the stratosphere.
2020 will be remembered not only for the pandemic, but also for the year that oil prices turned negative. As families left urban areas to relocate during the pandemic, demand for lumber drove prices up. With the gradual reopening of the global economy in 2021, demand for oil has increased and has caused prices to rebound to multi-year highs.
With OPEC only slowly increasing production, energy markets have tightened considerably as global stocks depleted and prices even higher.
Nonetheless, the surges in oil prices have been moderate compared to those seen elsewhere in the energy complex. A barrel of Brent crude cost nearly $ 87 at its peak this year, its highest level in three years. But its gains of around 45% so far this year are pale compared to those from other power sources.
In contrast, natural gas and coal grew much faster than expected when growing demand for power generation from countries like China and India collided with a shortage of available supply.
At the start of 2021, the strong demand for gas in Asia led in particular to a huge shortage of liquefied natural gas, in part due to production stoppages. This marked a huge turnaround from the previous year, when the LNG market collapsed under oversupply.
Then over the year, the tightening then shifted to the European market. This has been exacerbated by political tensions with Russia, which is Europe’s largest gas supplier.
European natural gas prices are currently on track to return to their highs of early October, seven times higher than they were at the start of the year. This had a ripple effect on the coal market, as power producers moved away from the more expensive natural gas.
Precious metals have arguably been the worst performers this year, in part due to market participants moving to assets that perform well in an environment of rising interest rates and lower yields.
These are the 10 best performing commodities of 2021 since the start of the year, according to data from Trading Economics:
10. Crude oil
Cumulative performance: 57.75%
Price (December 31): $ 76.54 per barrel
9. Heating oil
Cumulative performance: 60.41%
Price (December 31): $ 2.74 per gallon
Cumulative performance: 61.50%
Price (December 31): $ 3 per ton
Cumulative performance: 60.64%
Price (December 31): $ 1.04 per gallon
Cumulative performance: 61.70%
Price (December 31): $ 2.27 per gallon
Cumulative performance: 78.44%
Price (December 30): $ 228.85 per pound
Cumulative performance: 90.37%
Price (December 31): $ 686.75 per bushel
Cumulative performance: 111.30%
Price (December 30): $ 170.10 per ton
Cumulative performance: 124.79%
Price (December 30): $ 3 per gallon
Cumulative performance: 477.42%
Price (December 31): $ 42,256 per ton