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Energy Bulls Beware—$50 Oil Ahead

Tuesday, 18 Dec 2012 | 1:42 PM ET
Oil Headed Toward $50: Top Street Strategist
According to Francisco Blanch, the head of global commodities research at Bank of America, within the next two years WTI could trade lower, a lot lower.

If you're bullish energy, have we got news for you!

Francisco Blanch the head of global commodities research at Bank of America thinks the price of oil could print $50 within the next two years.

Blanch is talking about WTI, which is light sweet crude. He told us, "Essentially there's just not that much demand for this kind of oil," he said on CNBC's Halftime Report.

And to make outlook that much more bearish, he also thinks the market is oversupplied.

"We currently have over production – we're producing a lot of crude oil in this country. We saturated the transportation system and I think we could saturate the refining system in the next two years."

Part of his thesis involves current regulations barring exports of WTI.


Henrik Weis | Lifesize | Getty Images

According to Forbes, a law imposed after the Arab oil embargo effectively bans all but a handful of specific shipments.

However should that regulation change than all bets would be off.

It's worth noting that trader Stephen Weiss of Short Hills Capital thinks the thesis is far-fetched to say the least.

Blanch expects the price of Brent oil to remain around $110, which would create a $60 spread between the two – that is, should WTI fall to $50.

"I don't see it," insisted Weiss.

And should it happen the regulations would change to so quickly it would make your head spin. "If that happened, the US would export every spare barrel it had and we wouldn't have a trade defecit anymore."

Read More: Brent Rises Above $108 on Possible Thaw in 'Cliff' Negotiations

Trader disclosure: On December 18, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders; Steve Weiss is long YUM; Steve Weiss is long QCOM; Steve Weiss is long HK; Steve Weiss is long BAC; Steve Weiss is long JPM; Steve Weiss is long C; Joe Terranova is long VRTS; Joe Terranova is long TJX; Joe Terranova is long AAPL; Joe Terranova is long YUM; Joe Terranova is long SWN; Joe Terranova is long GLW; Joe Terranova is long DELL; Joe Terranova is long VZ; Joe Terranova is long XOM; Mike Murphy is long AAPL; Mike Murphy is long TGT; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long call spreads in AAPL; Jon Najarian is long call spreads in JPM; Jon Najarian is long call spreads in GS; Jon Najarian is long call spreads in FB; Jon Najarian is long call spreads in WFC; Jon Najarian is long call spreads in BAC; Jon Najarian is long call spreads in MS; Jon Najarian is long call spreads in ELN; Jon Najarian is long call spreads in APA; Jon Najarian is long call spreads in DVN; Jon Najarian is short puts in GLD; Jon Najarian is short puts in AGQ

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