Energy Prospectus

So oil went up about 27% in a few days, and now it is falling back quite a bit. In the past I have heard the phrase "back and fill," which, I guess, would describe what is happening here, if oil were to go back up to about 47, let's say. Just curious about your thoughts as to whether or not we saw short covering, and then a back off, or is something else at work here? Thx.

Crude oil prices never go up or down in a straight line. Crude oil futures are the most heavily traded commodity in the world. There is approximately 25X more "paper oil" traded than there is physical supply. This year's speculative trading in oil futures is at an all-time high.

Whenever there is a big run up, we normally see short sellers step in. Right now the Shorts seem very committed.

A large number of shorts is actually bullish, because they must cover their positions before the contract expiration date. They have significant "headline risk" when oil is near the low.