What Is a Spot Price?

By Matthew DiLallo – Updated Dec 13, 2024 at 10:02 AM

Key Points

Spot prices provide real-time asset values, guiding both immediate and future transactions.
Commodity traders use spot prices to set futures, stabilizing or speculating on price movements.
In exemplary data, WTI and Brent's spot prices were higher than their future prices, predicting a drop.

The spot price is the current market price of an asset, like a stock, commodity, or currency. It's the price the buyer pays on the spot. The spot price of an asset is important in determining its future price: the price of an asset agreed upon by a buyer for delivery in the future.

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Graphs of falling production and rising grain prices. — Image source: Getty Images.

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The market uses that price and factors in expected changes in supply and demand, the expected risk-free rate of return (i.e., the return on an investment that has no risk, in theory, like Treasury bonds) of the commodity holder, and the cost to transport or store the asset until the delivery date. The futures price could be higher or lower depending on market conditions.

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In mid-August 2023, the spot price for WTI oil was around $82 per barrel, while the spot price for Brent was about $86.50. For comparison, the futures price of WTI for delivery in May 2024 was $77.50 per barrel.

Meanwhile, the futures price of Brent oil for delivery in June 2024 was around $81 per barrel. In this example, the spot price for oil was higher than the futures price, implying that the market expected oil prices to decline in the future.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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