somebody, somewhere must eventually take physical delivery of that crude
I hope I didn't tell you this, because it is of course not right at all. Anybody can write a contract for delivery of some quantity of crude oil at some time in the future, whether they have the crude or not.
I, some jerk sitting in some office, can sell 1000 barrels of crude oil right now, if I want. Some other jerk elsewhere can buy some if he or she wants.
As long as I buy some back before the contract expires, I don't have to mess with it. That's why there is such a flurry of activity at the end of the month when the current contract expires.
I am taking a hell of a risk, of course. If I sell some November crude oil right now, the closer it gets to November, the more nervous I will be. I will be willing to pay whatever to get this offsetting contract.
What I would be speculating is that I can buy this contract back between now and November at something less than what I sold it for in the first place. If I can't, I lose. I will be pretty frantic on October 22, when the November contract expires, if I have not done something with this by then.
Each contract is 1000 barrels, so there are many many more contracts outstanding at a given time than there is actual physical oil.
The current (noon EDT) volume on April Crude Oil is 225,000 contracts, which represents 219,000,000 barrels of oil, and we are only talking about a half a day, and only one grade of oil, WTI. This does not inclue the "open interest" which is the number of contracts sitting around in some account somewhere. Right now, it's 333,000,000 barrels for April.