Energy prices used in the S&P Goldman Sachs Commodity Index (GSCI) ended 2021 59% higher than on the first trading day of the year. The increases were largely driven by increased demand from the initial phase of global economic recovery from the COVID-19 pandemic. To give a comparison, most other commodity indexes included in the GSCI increased by about 20%. The precious metals index was the only one to decline. The energy index of the GSCI increased more than twice as much as the industrial metals index on a percentage basis during 2021, this being the next highest commodity index group price change.
The GSCI tracks the performance of global commodities markets. Its index is a weighted average of commodity prices, and updates the weight it allocates to each commodity every year. In 2021, the energy index group made up 54% of the GSCI, and two crude oil benchmarks, West Texas Intermediate (WTI) and Brent crude oil, accounted for around 70% of the weighting in the energy sector index. WTI crude oil makes up the largest share of the overall GSCI at more than 21%.
Prices in energy commodity futures markets also greatly increased throughout the year. For example, the futures price of RBOB (a reformulated grade of petrol/gasoline used as the benchmark for gasoline trading) increased by 67% during 2021. The only commodity included in the GSCI that increased more was coffee, whose futures price increased by 81% during 2021.
Among energy commodities, prices for petroleum products such as RBOB and ULSD (ultra-low sulphur diesel, which is used as a benchmark for heating oil trading) increased the most during 2021, at 67% and 64%, respectively. Prices for crude oils such as WTI (62%) and Brent (55%) increased by slightly less. Futures prices for gasoil (what ULSD is called in Europe) increased by 54% during 2021. Natural gas prices increased the least among energy commodities, although 38% is still a relatively large increase.
Several factors contributed to the higher energy commodity prices throughout 2021, including weather disruptions, such as the February winter freeze and Hurricane Ida; increased demand for gasoline and diesel; and increasing demand for crude oil and natural gas at a rate faster than increased production.
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