Oil has been down more than $2 a barrel today, but some traders say the move to $100 is back in play. That trend became clear yesterday, when crude rose $4.37 to $94.39 per barrel, a 4.9 percent increase.
Joe Terranova, MBF Clearing director of trading, said he saw a a condition in crude futures today he hasn't seen in months. Terranova explained that the front month contract in oil futures, the January month, was trading at a slightly lower price than February.
Today's price move "is a modest correction based on the front month spread slipped into contango for the first time since earlier this summer," he said. February's contract was trading about 17 cents above January's this afternoon. "A contango market is not necessarily down but it doesn't trade with upward momentum," he said.
But Terranova says though the trend toward $100 is still in place. He said one sign of that is the call from Goldman Sachs for a $95 oil price in 2008. "When the New York Yankees say something, everyone listens," he said. Goldman apparently wears the pin stripes on Wall Street. "They bear a lot of weight in the marketplace. If I see them coming, I don't get in the way," he said.
M.F. Global senior vice president John Kilduff also says the move toward $100 per barrel is on. He has been predicting oil would hit $100 before the end of the year, and he said today's sell off is not surprising and the trend higher is still in tact.
"The enthusiasm over the (Fed move yesterday) has come off across the board. It's interesting. We also tend to buy the forecast and sell the storm. I think that's what you're seeing here as well, and it's natural after a move like yesterday that there would be a sell off," said Kilduff, a CNBC contributor. A winter storm hit parts of the east coast today and another storm crossing the country is expected to reach the eastern seaboard this weekend.
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