"With oil hitting $120, there are some things about the energy markets that don't make much sense. Or maybe they do?" http://www.forbes.com/technology/forbes/2008/0519/036.html "An oil bubble to rival the Internet boom" http://www.factset.com/websitefiles/PDFs/outlook/english/03-05-2008english.pdf
It looks like China doesn`t need anymore oil for the next couple of months, so there demand is going to put a lot of extra crde supply on the market compared to the last 3 months. Looks like the shit is about to hit the preverbial fan, we are going to see some 1.89 down days, but we are going to see some 4.90, and 6.50 down days coming up as the BIG BOYS all unwing positions at the same time, and smaller guys getting crushed along the way, with stops excelerating moves to the downside!
The 'bursting' oil bubble bubble won't be dramatic at these levels. How much downside could there be? 20% at most?
Which economist said unemployment would hit 20% and a major world depression would ensue if oil hit $60 or $90? I don't know of a single one, let alone a consensus.
Why on earth would you use standard deviations to forecast market prices, when it has been widely known since at least the 1987 crash that market moves are not normally distributed? If the normal distribution does not describe market price moves, then it doesn't matter if you wait 1, 2, 3 or 4 more standard deviations, you will still eventually get f*cked when an outlier move occurs.