One has to wonder if the Nymex is raising its margin requirements in order to increase volatility, I can't see an advantage to them doing so, but the alternative is that they are incredibly stupid, and that doesn't seem to fit with the board members experience and the Harvard degrees. The higher the contract margin rate (oil, natural gas and gas), the lower the fees they will collect (less contracts being traded). So, its usually advantageous to the exchange to keep margin requirements as low as possible, for simple reasons, the predominant one just mentioned. Nymex has raised margin requirements twice this month, which on the surface might seem reasonable, given the historic highs, the increased volatility, the change in trading patterns, and the massive volume. Much of this undoubtedly is due to the hedge fund/investment bank losses which cut trading jobs, which jobs are largely being replaced in the commodities sector, as investment banks/funds open up commodity trading ops to get in on the bull futures market. This has caused the trading patterns to change, and added liquidity, and perhaps some of the volatility. If you actually investigate the technical data, you will find actually that the increase in margin reqs was the predominant factor in INCREASING volatility, which is to say, if they kept the margins the same, volatility would undoubtedly be lower. You can clearly see this in the trading patterns immediately after the margin reqs were raised. Why this is, I can only conjecture that all of the retail orders that smoothe out the trading (fill in the gaps between the funds massive orders), are been reduced, while there are more black boxes and funds trading oil. Then when you get a little unusual volatility, traders start putting in wider stops, which get wider as volatility increases, until we get the situation we have now. Why am I writing about this?...hmmm.. I am a little more than pissed that oil in particular is getting its trading patterns dramatically altered week-to-week (day to day?), and that it now trades almost the same as natural gas (if I wanted to trade those trading patterns I would trade NG), in large part I believe due to the Nymex. Anyways...just wanted to put this out there for discussion, what people think the reasons are for the change in oil trading, and if they think oil will ever normalize/when the volatility dies down. I think that once we get out of the historical high range, and the bull run is deflated, that things will calm down...I hope that the volatility in oil is simply a blip, as it is/used to be? my favorite trading instrument.