These commodity market blowups are becoming all-too-familiar in the last few years.

Many theories exist as to why the price of crude oil zoomed from about $120 a barrel in mid-May to threaten the $150 mark in mid-July, only to sharply reverse that trend in the last week.

But one emerging story revolves around SemGroup, an oil marketing firm that filed for bankruptcy, disclosing heavy losses on short positions in crude oil that they were forced to reverse as the market’s gains went from steady to accelerated to explosive.

It wouldn’t be the first time that a long, ongoing bull-market rally in a commodity turned into a buying frenzy, fueled at first by speculators caught up in the mere expectation of higher prices, later by the same smelling someone on the wrong side of the trade trying to get out of their positions, such as what seems to have happened with SemGroup.

“If they sense there’s a wounded animal, a wounded fish, the sharks will circle,” says Phil Flynn, senior market analyst at Alaron Trading in Chicago.

SemGroup said in its bankruptcy filing that it had bet that crude prices would fall, and was shorting crude as a hedging strategy, but had to unwind those positions in order to minimize losses. Traders seeing unusual activity (such as June 5 and 6, when oil gained a ridiculous 13% in two days) may not have even known about a particular company struggling, but there is a tendency to pile on, creating a short squeeze.

“I never heard boo about SemGroup until the headlines,” says Stephen Schork, who manages an oil and gasoline newsletter out of Villanova, Pa. “The point is, I was bullish also, I’m buying also. It doesn’t matter that it’s SemGroup — all I know and all the market knew was that prices kept on going higher. Trading is about instant gratification and it created this frenzy.”

As the dust settles, the question is whether investors, looking out to the future, see oil prices resuming their course, or whether this activity represents a climax of some sort. Recent occurrences suggest that the commodity in question may eventually resume its earlier trend, but it won’t be immediate.

“The market was constantly looking for fresh news to go higher, no matter how irrelevant the news was, it wanted to go higher,” says David Aleman, senior trade analyst with Grand Central Trading Co. in Newport Beach, Calif. “Traders and speculators may now be on edge and look to sell.”

In the spring of 2006, Dwight Anderson and his New York investment firm, Ospraie Management LLC, were hammered when large short positions in the copper market had to be unwound. At one point, copper breached $4 a pound, but fell sharply back, declining for the rest of 2006 before it started to move upward again (it recently pushed through $4 a pound again).

In February, the soft winter wheat market exploded, hitting $13.34 a bushel on one day after bets made by a broker at MF Global went the wrong direction. After another brief spike in early March, the price of wheat reversed dramatically. More recently it was at $7.88 a bushel, still high by historical standards, but the uptrend has not been resumed as of yet.

Reduced demand and sluggish economic activity would suggest that oil may have more room to decline from here. Mr. Schork says if oil reaches $120 a barrel, the bullish types will have to protect that level, or else it could be headed “back to double digits.”

Still, it’s early to make such a statement. “This could be the start of something big for oil — the frenzy is probably over, but anytime you say that in this market it’s a dangerous statement to make,” Mr. Flynn says.