2. Being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligation.
3. The standardization and interchangeability of listed options and futures contracts and certain other financial instruments with identical terms.
Fungibility permits either party to an opening transaction to close out a position through a closing transaction in an identical contract. All financial contracts with identical terms are not necessarily fungible, a fact that can increase risk in some markets.
Examples of highly fungible commodities are petroleum (gasoline), electricity, precious metals, and many currencies.
Fungibility has nothing to do with the ability to exchange one commodity for another. It has everything to do with exchanging one unit of a commodity with another unit of the same commodity.