And here we have evidence of government manipulation of the price of oil as I suggested last week (and was sumarily derided for):

MSN

Did the government force down oil prices/

The United States government successfully popped the commodities bubble and brought down oil prices just in time for the election season, according to the latest rumor spreading around Wall Street trading desks.

Market strategist Donald Coxe from Canada's BMO Capital Markets discussed this idea in a note to clients last week. In his words, Ben Bernanke and Hank Paulson, trapped between commodity-fueled inflation and a tumbling financial sector, took "the pressure off the heavily-levered banks by putting pressure on the heavily-levered speculators and hedge funds that were short the banks and the dollar, and long the commodities."

They accomplished this in July by announcing the U.S. Treasury would extend Fannie Mae and Freddie Mac a line of credit while holding open the possibility of equity purchases -- moving the government's implicit guarantee of the GSE freak shows firmly into the explicit column. Coxe dubs it the July 13th Commodity Massacre.

By releasing the news over the weekend, when Asian markets were opening and liquidity was limited, the impact on both trader psychology and price were maximized. Moreover, the announcement was accompanied by a crackdown on short selling of financial stocks and "false rumors" by the SEC, as well as a reclassification of commodity traders by the CTFC.

The high flying hedge funds had flown straight into the G-Man's trap.

More at the link