It should come as no surprise to anyone who has to buy gasoline, heating oil, natural gas or any other petroleum product—PowerShares DB Energy Fund (DBE), which began trading on Jan. 5, 2007, has had a spectacular run as the ETF approaches its 18-month anniversary.

The fund’s NAV return since inception is 115.2%, including a 49% year-to-date gain (through June 13) and a 27.6% jump in the last three months, all better than 89% of energy ETFs.

DBE invests directly in futures contracts, exchange-traded instruments promising the delivery of oil at a pre-determined price on a future date. Essentially, the fund bets on the price of five energy commodities—Brent crude oil, heating oil, light crude, natural gas, and RBOB (reformulated gasoline blendstock for oxygen blending) gasoline.

The fund generates returns from fluctuations in the price of the commodities; from interest on Treasury bills used to collateralize the futures contracts; and from rolling contract yields, thanks to the PowerShares DB Optimum Yield model.

Prices for four of the five have been rising for several years and hovering at or near record highs for several months, the key reason for DBE’s sparkling returns. The fifth, natural gas, is also up sharply in recent months.

On Monday, for example, Brent crude was 89% more expensive than it was a year ago, while RBOB gas was 49% higher. Spot prices for Henry Hub natural gas—which make up just 10% of the fund’s base weighting, compared to an equal 22.5% stake in each of the other four—were up 64% over the last year, to $12.49 per million British thermal units.

The fund’s daily index weightings vary due to fluctuations in price, and the index is rebalanced to the base weights annually during the first week or so of November.

While the mix makes DBE more diversified than PowerShares DB Oil Fund (DBO) or the popular United States Oil Fund (USO)—which has taken in nearly $1 billion versus $168 million for DBE and $85 million for DBO—this fund is clearly not a diversified fund.

In fact, DBE is not part of our PowerShares Momentum Tracker Portfolio because we gain exposure to oil through the DB Commodity Index Tracking Fund (DBC), which also tracks aluminum, corn, gold and wheat.

DBE has out-gained DBC since we added the latter to the portfolio (Nov. 1), 52.1% to 42.8%. But can that continue? Commodity investing is always risky. And the long, seemingly merciless run-up in prices for the energy commodities that make up 90% of this fund’s assets only magnify that risk.

Last fall, Cleve Rueckert of TickerSense noted that we were in the 22nd oil-price rally (20% or more) in two decades. After each, prices declined by an average of 32% over an average period of four months. Such a drop would likely be devastating for shareholders of DBE and a host of other commodity and energy funds.

In Monday’s commodities round-up, the Wall Street Journal noted, “After rising 40% this year, some observers wonder how much higher crude prices can go before prices cripple consumption.”

Of course, this rally may be different. For one thing, as Rueckert pointed out, the average rally lasted 226 days, and this one is closer to 500 days now, since oil closed at $50.48 in January 2007.

The U.S. slowdown, the weak U.S. dollar, interest-rate cuts by the Federal Reserve, and an influx of money into speculative energy and commodity investing, along with a constant in the space—geopolitical issues—have all helped lift prices to the stratosphere.

Crude futures hit another intraday record on Monday, nearing $140 per barrel, before falling back on news of Saudi Arabia’s announcement that it will boost output. On Monday alone, prices gained and then fell nearly 4% before closing down just 0.2%. Analysts are predicting anything from a 30% drop in oil prices to another big jump: Matthew Simmons, president of Houston investment bank Simmons & Co. International, predicts oil will hit $200 to $500 per barrel over the next six months to five years, as reported by the Wall Street Journal.

The bottom line: No one knows what’ll happen next, though more and more experts are saying that $150-$200 oil is realistic over the next six to 12 months. While that would be good news for DBE shareholders, it may come with potentially violent swings, both up and down.

The news from Saudi Arabia caused DBE’s NAV to drop 3.25% intraday on Monday (after opening 2.74% higher than Friday’s close).

That’s a lot of movement, even for investors with commodity funds as a niche play, designed to diversify a portfolio. For most, that’s the only role this fund should play, especially right now: DBE may offer some protection in today’s stormy seas as a hedge against inflation and other market troubles, but its outsized returns raise the question of whether it’s too late to get on board.