Using a Commodity Chart

A commodity chart can give you historical data but also provides a glimpse into the future

A commodity chart gives you an indication of the direction of the current spot price for that commodity. Generally, prices of commodity related stocks rise because the spot price of the actual commodity is about to or is currently increasing.

The price of crude oil is generally quoted in US$ per barrel. The New York Mercantile Exchange or NYMEX Natural gas prices are commonly quoted in US$ per million BTUs. Coal is quoted in short ton (2,000 pounds or 907 kg). The uranium spot price is quoted on a per pound basis.

In this series of free commodity charts, charts showing the delayed spot price of West Texas Intermediate (WTI) and Uranium are shown. To see charts of Brent oil per barrel replace WTI in the Tradingview Chart with BRENT.

Prior to purchasing an oil company, you might want to have an idea on what the price of oil is doing. This could be one way you would reduce your risk. Although there are times when a company will move on it's own news.

In the chart below you will see the one year price of crude oil. There can be a difference between the Brent (BRENT) and West Texas Intermediate (WTI) oil price. Sometimes they align while at other times there is a large difference between the two. The difference in price can be reflected in the quality and ability of the product to get to the markets that pay the the most. WTI or Texas light oil is generally considered to be the higher quality oil while Brent can get to more markets easier. Therefore the price differential between them will vary depending on what is going on at the time.

Coal and natural gas are other energy related commodities. Natural gas is generally used for the production of electricity and as a fuel source for home and industrial heating. It's markets are limited as it needs to be shipped by pipeline or liquefied and shipped by boat. To get a better understanding of current natural gas prices replace WTI in the TradingView chart with Natural Gas and look for the Spot price.

There are two major types of coal: thermal coal and metallurgical coal. Metallurgical coal also known as hard coking coal, is a higher quality coal and generally much higher in price. It is generally sold via contracts between the producer and user. To find the approximate price of metallurgical coal it is suggested that you read the quarterly financial statements of companies that sell metallurgical coal such as Glencore (symbol GLEN) on the London Stock Exchange or Arch Coal (symbol ARCH) on NYSE.

The market for thermal coal is much larger. It is generally used in coal fired electrical plants. Chian is a large supplier into this market. The trading symbol for this can be found by replacing WTI in the TradingView chart and typing in GlobalCoal Newcastle Coal Futures.

Coal can be used to forecast the economy. As an expanding economy uses steel (metallurgical coal) and electricity (thermal coal) when the price of coal is moving up the economy could be considered to be expanding.

Realize that the price of a commodity is just one line in a companies financial statement. The cost of production includes many other inputs such as labour, energy, taxes, insurance, legal, accounting and repairs. There are times when commodity prices are high yet production costs are even higher. Therefore, there will not always be a straight line connection between the commodity and stock price.

Uranium Price Chart

In the chart below, you will see a 5 year price chart of Uranium. As the world seems to be warming up there is more concern about global warming and as such replacing coal fired electrical generation with Uranium may become more likely. 

I have lived in Alberta for over 25 years. When we first arrived in 1997, during the winter it would get down to below 30 oC for at least 3 weeks at a time. This has slowly reduced to 2 weeks then one week. Our summers seem to have gone from allmost non existent to quite pleasant so I have felt the effects of what appears to be global warming.

Also, with the large push to move to electrical vehicles, there will be more need for electricity to charge these vehicles while they are on the road. Thus it would seem likely that the need for Uranium will increase and as such, the price of Uranium may increase as well.

Using a base metal or precious metal commodity chart can give you a leg up on your stock trading. It gives you a bit more information that may make reading a stock chart easier.

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