Hedge funds are bailing right now because the bubble has burst, as I (ahem) predicted three months ago. It was never a speculative frenzy in the purest sense, although speculation was certainly part of it. The oil bubble of the spring and summer resulted from (1) rapidly escalating demand at a time when (2) the US dollar was being allowed to dramatically weaken, and (3) when there was absolutely no possibility (perceived) of the US allowing more exploration or refinery development. All three of those conditions have now changed, and the smart money has switched sides.
Agreed. This has to be viewed as an attempt to support current oil prices(or at least slow the descent.