Speculative Oil!

Oil prices broke the US$140 level for the first time this week, with August crude surging near US$143 a barrel on both New York Mercantile Exchange (NYMEX) and ICE Futures Exchange in London.
A report the US Congress released Monday showed that, in January 2000, 37 percent of the NYMEX crude futures contracts were held by speculative traders; but in April 2008, the number has soared to 71 percent. Meanwhile, the proportion of contracts held by commercial traders greatly declined.
The US Commodity Futures Trading Committee (CFTC) revealed in May that it began investigating potential price manipulations in the oil trading market in December 2007. The early findings show that since the sub-prime mortgage crisis large amount of speculation fund has turned to buy commodities like crude as a hedge against inflation.
Speculation theory was also echoed by the Wall Street. Hedge fund manager Michael Master testified on May 20 that his pals in the Wall Street are pushing up world oil prices through speculative investment in futures market. Moreover, he pointed out at the hearing held by CFTC acting Chairman Walter Lukken on Monday that with greater regulation oil prices could drop to the level of 60 dollars a barrel within about 30 days.
Three days later, just after the oil prices surpassed US$140 point, the US Congress approved a bill with a 402:19 vote that directs the CFTC to use its authority to curb speculation in the energy futures market.
However, some argue that "calling it speculation is way too simplistic"; or instead, speculation is more the consequence than the cause of a tight market.
When testifying before a US Congress panel on June 3, billionaire Soros admitted that there are "strong fundamental factors" while labeling the oil prices hike as a bubble largely made by investment institutions through index fund.
Tracking the Dow on Tuesday,01/07/08

9:30am--Gap Down nearly 100.0 points.
Stocks suffered as oil rose above $143 per barrel, a move blamed on rising tensions in the Middle East. Traders also cited an International Energy Agency report Tuesday that said the supply of crude oil is expected to remain tight.
10:30am--Full Gap recovering.
Buy-long position,a morning star.Main Candlestick,a shaven bearish top.
11:30am--Bearish harami earlier.
Sell-close position since it's abovethe MAV and a Triple top.
12:30pm--Morning star at 1st session low.
Open-long position again.
1:30pm--An inverted hammer seen.
Look to close at MAV since main candlestick is still in the black.
2:30pm--Breakout of MAV.
Close position.Too many bearish spin hoovering around.
3:30pm--Sudden spike up.
The U.S. ISM manufacturing index rose to 50.2 in June, a surprise increase from 49.6 in May.U.S. construction spending fell 0.4% in May, less than economists were expecting, after a 0.1% decline in April.
4:00pm--Bullish recovery.
The Dow dropped 14.4% in the first half of 2008; the S&P 500 plunged 12.8%; and the Nasdaq fell 13.6%. While June is often a quiet month, last month was one of the worst Junes on record, with the Dow's decline the biggest in percentage terms since 1930.
The spinning bottom should pave the way for stabiliztion unless otherwise another geo-political tension arises.