2011, 83 p., Oxford Institute for Energy Studies.
The view that crude oil has acquired the characteristics of financial assets such as stocks or bonds has gained wide acceptance among many observers. However, the nature of „financialisation‟ and its implications are not yet clear. Discussions and analyses of „financialisation‟ of oil markets have partly been subsumed within analyses of the relation between finance and commodity indices which include crude oil. The elements that have attracted most attention have been outcomes: correlations between levels, returns, and volatility of commodity and financial indices. However, a full understanding of the degree of interaction between oil and finance requires, in addition, an analysis of interactions, causations and processes such as the investment and trading strategies of distinct types of financial participants; the financing mechanisms and the degree of leverage supporting those strategies; the structure of oil derivatives markets; and most importantly the mechanisms that link the financial and physical layers of the oil market.
