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What's Up--Or Down With These Oil Prices?

This morning traders on the NYMEX floor were buzzing about the oil plunge under $100 a barrel, perhaps marking the bursting of the commodities bubble.

After all, the U.S. dollar index popped over 1 percent, as the dollar rallied sharply against the Euro and other currencies, and the resulting metals meltdown sent gold under $900, bottoming this session under $872.

That's the lowest price for the precious metal since the end of January. Platinum slid another 6 percent today, silver and palladium are down over 2 percent.

Our colleague Bob Pisani has been talking about investors moving money from commodities to stocks as a major factor contributing to the two-day slide. But from my perspective, it's a different story in the energy markets today than the rest of the commodities complex.

Oil bulls have shown tremendous resolve. "It's pretty impressive," says Joe Terrranova, director of trading for MBF Clearing Corp. "Everyone right now would think oil would be at $98 or $99," but with 30 minutes left in the trading session oil is firmly back over $101.

Gold has seen a more than 10 percent correction, since the March 19 record close of $1003. Oil, too, is more than 10 percent off its all-time high of nearly $112. But oil prices have bounced back from the $98-101 range several times in the past 3 weeks. NYMEX crude futures haven't settled below $100 since the beginning of March.

Even after hitting an intraday low of $98.65 on March 20, prices still closed above $101 a barrel on that day. In fact, prices have closed above $100 for the past 18 consecutive sessions.

Demand concerns that seemed to weigh on the market this morning haven't abated, but Terranova says they've largely been priced into the market. Pump prices keep rising--at a record near $3.29/gallon today for regular unleaded gasoline, according to AAA. Many drivers may be opting for partial fills rather than topping off the tank.

The latest MasterCard SpendingPulse survey shows retail gasoline demand slid 1.7 percent year-over-year, continuing a trend of declines over the past 9 out of 10 weeks. But that hasn't hurt RBOB gasoline futures today--they've also turned positive on the session. Trader Anthony Grisanti says the May gasoline crack could close over $10. Remember it was at a record low just about two weeks ago.

Gasoline is actually helping to support oil prices today. Though the consensus for tomorrow's oil inventory report is that crude stocks rose over 2.8 million barrels, gasoline supplies are expected to have fallen 2.7 million barrels, according to analysts surveyed by Platts.

If that draw is greater than expectations, Stephen Schork of the Schork Report says the market may read that as supportive for prices. Remember, yesterday Stephen said the oil bears might look like April fools today...and oil prices are still over $101 in this volatile session...at least for now.

Questions? Comments? energysource@cnbc.com