Thank you CHS, I always enjoy reading your thoughts. I don't have a background in finance and would appreciate a bit more explanation of a couple of basic points.
When your refer to the "financialization of oil," I understand you to mean that big investors (whose money might currently be tied up in stocks, bonds and real estate) sell these assests and purchase oil. This oil can then be used as high quality collateral to get ever bigger loans.
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Is the money being used to purchase the oil created by the recently expanded money supply? Is it being created by direct Fed "money printing" and excessive loans encouraged by the very low interest rates? Is this surplus "hot" money a direct result of recent Fed policy?
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So what physically happens to that oil? Do they rent huge storage tanks, fill them and then just hold the oil off the market in storage? There has to be a limit to available storage capacity.
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Or are they buying contracts to purchase oil, not yet extracted, at sometime in the future? And again, will it be stored or kept off the market? What happens when the storage facilities are full? Won't it need to enter the market at that point?
Thanks.