How Does the Storability of a Commodity Influence Its Settlement Method?

Commodities that are non-storable, such as electricity or certain perishable goods, must be cash-settled because physical delivery at a future date is impossible or highly impractical. Storable commodities (like gold or oil) can be either physically or cash-settled.

The cost of storage for storable commodities is a key factor in the futures price, influencing the decision between the two settlement types.