| Summary: | The sharp swings in oil prices and the marked increase in volatility during the latest price cycle have focused attention on the possibility that crude oil has acquired the characteristics of other financial assets such as stocks or bonds. The view that the oil market has become ‘financialised’ and that crude oil price behaviour in recent months has mimicked the behaviour of other financial assets has gained credence among many analysts. However, the nature of such a transformation and its implications are not yet clear. Discussions of ‘financialisation’ of oil markets have partly been subsumed within analyses of the relation between finance and commodity markets indexes, which include crude oil. The elements that have attracted most attention have been outcomes: correlations between levels, returns, and volatility of commodity and financial indexes.
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