Oil prices went sky high and then dropped - after reaping the highest corporate profits in history for large oil companies. Is the market price really based on "fundamental supply and demand" or is there something else at work?
Another article investigates the influence of hedge funds in the energy markets.
Fanning the Flames
An influx of hedge funds is making energy markets more volatile than ever
Wall Street Journal
October 16, 2006
Energy markets have always been volatile, with constant shifts in supply and demand -- or just the expectation of such shifts -- triggering price swings that have often caught investors by surprise. But now, participants say, an influx of hedge funds has made these markets even riskier.
Many of these funds are employing particularly aggressive trading strategies, moving in and out of the markets more quickly than more-established investors, and in the process often magnifying the intraday movement of prices. That leaves everyone in the markets more vulnerable to losses, and it isn't just big investors whose money is at risk.
