Crude oil has been the talk of the financial media for several weeks now. When 2011 began, oil was sitting well below $100 per barrel, and it didn't seem that it would be making any meteoric jumps in the near future, but the year had different plans in store for the important commodity. As crisis and revolution broke out among numerous Middle Eastern countries, oil prices began to skyrocket, because several of these countries were among the top crude-exporting nations on the globe. Oil quickly broke the $100-per-barrel mark and at its peak sat just under $120, but that all quickly changed as a week of volatility has put downward pressure on commodities across the board. (See also "Don't Fight the Curve: Five Commodity ETFs in Backwardation.")

The frantic run in markets began Monday morning, as the financial world reacted to the death of Osama Bin Laden, as well as what the future holds for geopolitical issues in Middle East. Next came a quick reversal in sentiment regarding the dollar as the greenback strengthened, slaughtering a number of commodities that had been preying on the fragile currency. But the main blow to crude oil came yesterday, when a jobs report came in way off schedule. In fact, the gap between the jobless-claims estimate and the actual figure represents the second-highest gap in history for this kind of report. Analysts estimated that claims would come in near 410,000, but in actuality that number was reported at 474,000, signaling that the recovery may be screeching to a halt. (See also "New Oil ETF (CRUD) Debuts.").

All of this volatility led to an unprecedented drop in oil prices yesterday, as the price per barrel dipped into double digits. Perhaps what is most bizarre about this occurrence is that major oil equity companies did not endure anything near the 9.07% loss that crude prices saw. Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) saw dips of only 2.6% and 2.0%, respectively, creating a cloud of confusion over the actions of oil yesterday. It may be that the drop was merely a momentum play and that oil is due for a strong rebound today, or it also may be a sign that oil was overvalued and is poised to stay below triple-digit prices for the foreseeable future. (See also "USO vs. BNO: Explaining the Big Gaps in Oil ETF Performance.")

In light of crude's demise on Thursday, today's ETF to watch will be the United States Oil Fund (NYSE: USO). This futures-based product provides exposure to futures contracts on light sweet crude on the New York Mercantile Exchange and is among the most popular ETFs in the world. USO changes hands an average of 13 million times a day, but that figure jumped to more than 60 million yesterday, as this fund saw a drop of more than 9% in its share price. With oil being a big mover on the day yesterday, all eyes will certainly be on the fossil fuel as Friday's trading plays out. (See USO's fundamentals).

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