There are many factors that affect oil prices. Fundamental factors such as global supply and demand and dollar moves are often cited. But many also say that traders play a big role in affecting oil prices fluctuations. No doubt, fundamentals are behind oil's long-term uptrend. And it is the dollar's weakness of the past few years that has supported the trend. But short term? Could traders' short covering be the reason behind oil's recent run-up to nearly $150 a barrel?

Perhaps, but that's behind us. Oil prices have retreated more than $20 dollars since. What caused that? Have the fundamentals changed? Some say global demand is bound to slow as the global economy weakens, but others say supply concerns due to geopolitical unrest are also growing. Has the dollar strengthened? A little, but then it declined right back Thursday after a housing report showed recovery is still far off. And what about traders?

Well, here's where The Wall Street Journal as well as Reuters bring an interesting theory. They say that the rise and fall in oil prices coincided with energy company SemGroup L.P.'s (mis)fortunes. SemGroup is a little known private company that transports, stores and distributes crude oil and refined products. It is also the parent of pipeline operator SemGroup Energy Partners L.P. (NADSAQ: SGLP). SemGroup L.P. filed for Chapter 11 bankruptcy protection Tuesday. According to the Journal, "Changes in its hedging strategies coincided with big moves in oil recently."

Fed Chairman Ben Bernanke was in Massachusetts on Monday, speaking at a conference, according to this article. As you can imagine, he had some things to say about the economy. Believe it or not, they were actually encouraging, and it should cause many to feel at least a little more comfortable, even though the world appears to be ending thanks to really expensive oil futures. In fact, if Bernanke is to be believed, we don't have a lot to worry about.

Well, we do have to worry about a few things, but Bernanke believes that a "substantial downfall" in the economy is not as guaranteed as recent market action has suggested. I'm not sure if he's correct about this. With gas prices hitting a record of an average $4 per gallon, the psychological fallout is going to be immense. Add to that the recent employment data, and the economy seems to have found a wonderful recipe for disaster. But what I like about Bernanke's comments is that they too can hold psychological sway. He believes that the net outlook isn't any worse than before, and many observers suspect that he is done lowering rates. While some might look upon that stance as a harbinger of positive tidings, I think we have to remember that Bernanke's hands are tied right now, and that he has been put in a damned-if-you-do-damned-if-you-don't scenario. If he drops rates any further, then the dollar becomes less valuable on a global basis and inflation becomes increasingly problematic. If he pauses, then what about growth? It all goes back to oil and the dreaded specter of stagflation.

AMR Corporation (NYSE: AMR) opened at $25.60. So far today the stock has hit a low of $25.60 and a high of $26.80. As of 2:15, AMR is trading at $26.53, up $1.15 (4.5%).

After hitting a one year high of $41.00 in January, the stock has trickled downward over the past four months. Soleil upgraded the airline industry as a whole today, and specifically American Airlines, from hold to buy, giving shares a boost. Also mentioned was Continental Airlines (NYSE: CAL). Oil futures, which are finally relaxing somewhat over the past two weeks are also helping airline stocks. Recent technical indicators for AMR have been bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $20 range. AMR hasn't been below $20 since September and has shown support around $24. This trade could be risky if fuel prices rise again, but even if that happens, this position could be protected by the support the stock formed around $20 in August.

Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AMR or CAL.

ConocoPhillips (NYSE: COP) opened at $70.05. So far today the stock has hit a low of $69.37 and a high of $70.70. As of 12:20, COP is trading at $70.38, up $1.10 (1.6%).

After hitting a one-year high of $74.89 in December, the stock has been slowly recovering over the past four months from a sharp dive it took at the turn of the new year. The front month crude oil futures contract is up 75 cents on the day, and front month gasoline futures are up almost 1%, boosting COP shares in early trading. Recent technical indicators for COP have been bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $60 range. COP hasn't been below $60 since October and has shown support around $67 recently. This trade could be risky if oil prices drop below $60 a barrel, but even if this happens, this position could be protected by the strong historical support around $63, combined with the stock's 200-day moving average, which is currently at $65 and rising.

Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At press time, Brent neither owns nor controls a position in COP.

Unsubstantiated rumors overnight that Iran fired on U.S. navy warships and heightened concerns over Iran's detention of 15 British sailors have spurred strong buying in oil futures. That's helped drive the price of the May West Texas Intermediate Crude contract through key short-term resistance at $63.75 per barrel, setting the stage for further technical gains in the days ahead.

The obvious play here is to buy oil or oil-related shares. However, weak economic data, including today's lower-than-expected durable goods report for February, suggests that it might make more sense to bet against stocks in the consumer sector. Research I've done points to a strong inverse relationship between energy prices and the performance of consumer-related shares.

One strategy worth considering (for those with the appropriate risk profile): selling short or buying inexpensive, in-the-money put options on the S&P Consumer Staples Select Sector SPDR exchange-traded fund (AMEX: XLP) or the S&P Consumer Discretionary Select Sector SPDR ETF (AMEX: XLY).

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

Chevron Corp. (NYSE: CVX) opened at $67.28. So far today the stock has hit a low of $66.77 and a high of $67.49. As of 12:50 this afternoon, CVX is trading at 67.05, up 0.62 (0.9%).

After hitting a one year high of 76.20 in December, the stock has lost about 13% over the past three months. Oil futures are rising today after slipping over the last two trading days, giving CVX a boost in early trading. The technical indicators for this stock have been bearish and steady, while S&P gives CVX a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $60 range. CVX hasn't been below 60 since June and has shown support around 68. This trade could be risky if oil takes a dive, but even if CVX retreats, strong historical support around 61 could protect this position, plus the stocks 200 day moving average at 66.75 could also provide support.

Brent Archer is an analyst on the move at Investors Observer. (Free Subscription)

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.

Oil has been heading towards the $60 level over the past couple of sessions and is trading down again today. Unusually warm weather has created downward pressure on precious crude, which last week was looking as if it was about to head up to the mid $60's to close out the year.

February futures for oil have traded down $0.36 today to $60.74, and oil is trading right at its intra-day low of $60.73.

If oil is not able to hold above $60 we could see prices fall steeply to start off 2007 and head down towards the mid $50's. Warm weather and lack of trust in OPEC's ability to keep its thumb on oil production are, as usual, the major factors weighing on the oil market.

With most of the U.S. experiencing warm weather and the next possible OPEC cuts coming in February at the earliest, there is not a whole lot that could come into the market and push prices higher in the near future. Of course Iran will be playing a major role moving forward as the world continues to pay attention to their nuclear program. This could be a catalyst for some destabilizing geo-political unrest as we start off the new year.