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Is The Oil Rally Over?

With oil seeing its sharpest drop Thursday in 2 months, is it safe to say the rally has finally ended?

Oil pricesfell more than $4 Thursday despite the Energy Department reporting unexpected declines in supplies last week. (They said the drop was due to temporary delays in unloading oil tankers along the Gulf Coast.)

The magnitude of the decline suggested to some analysts that the bullish momentum that pushed prices over $135 as recently as one week ago may be running out of steam.

"The back of the board has fallen $13," said independent oil trader Joe Terranova on Fast Money. (The back of the board refers to future contracts that go a little farther out into the future.)

"I think this is a period for the market to test $120. And from there I’d like to see who shakes themselves out of the market if we break below $120."

How are you playing oil?

"I’m short Hess and I’m long Southwest Airlines, long the Canadian dollar and long one of the refiners," he said.


















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Trader disclosure: On May 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (BTU), (C), (AGU), (NUE), (GS), (INTC), (MSFT); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO), (AAPL); Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (BIG); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (GLNG); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY): Pete Najarian Owns (AAPL), (ANR), (BHI), (TSO), (XTO), (XLF), (HPQ), (BKC) (MAS), (ENER), (SYMX) (SVNT); Pete Najarian Owns (BAC) Puts

Terranova Owns (SUN), (LUV), (GS), (FXC); Terranova Is Short (HES)