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Oil & The Fed

Oil tried to rally Tuesday, but Ben Bernanke ended that when he expressed concern about inflation. Is the bubble about to burst?

I’m not sure how much of a headwind the Fed presents for oil, says Addison Armstrong, Director Of Market Research At Tradition Energy on CNBC’s Closing Bell. It’s still a supply driven market.

How would you trade?

Through the summer I see a lot of political uncertainty ahead as well as a hurricane season, replies Armstrong. Short term the bias in oil should be higher and I think it could go to $150.

But in the third and fourth quarter I expect to see the effect of these high prices weigh on economic growth especially in Asia.. and especially in China after the Olympics. That’s when I see the potential for a strong pullback in crude.

What’s your long-term outlook?

It could be down to $100 by year’s end, replies Armstrong, and one year from now crude could be trading around $80.













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