Just as in the way up, oil is priced at the margins AND by speculative action. It doesn't take much of an increase/decrease in demand to make a large difference in pricing at the margins. And that's before all these people coming in and speculating on momentum, whether up or down.
Frankly, with the advent of so many financial instruments and regular/concentrated long and short ETFs on the market, I think we've made it way too easy to speculate on the short-term up/down movement of stocks, bonds and commodities, and I don't think that's a good thing for the certainty or stability of the markets and ultimately the economy at large. Some of that is inevitable from the pros, but do we need to make it so easy?
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)