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Steve Cortes: Time To Short Oil

Trader Steve Cortes of Veracruz thinks its time to short oil . Considering Goldman sees crude at $92 in 3 months, what makes Cortes so bearish?

He didn't like the price action in oil on Tuesday which he describes as a meaningful reversal. (Oil started the day higher but then turned lower in the afternoon as you can see from the chart.)

Some say the reversal was merely triggered by news that Enbridge had restarted its 70,000 barrel per day pipeline from Ontario to New York state after inspecting it for a leak.

Others say the reversal was due to chatter that the latest inventories data would show a modest rise.

However, Steve Cortes is looking at some other catalysts, which he believes are far more bearish.

”With the dollar lower Tuesday crude should have performed well but it didn’t,” he says.

”Also the price of oil used to move in lock step with the EEM – that’s because as emerging nations grow they devour a lot of crude. But in recent months they’ve diverged. I believe that’s a bad sign.”

Taking all those factors into account, “I’m shorting crude on the reversal,” he explains.

Long-time energy trader Joe Terranova takes a different tack.

He agrees that the spot price of oil may be challenged but doesn’t think “the story in energy is about where the price of oil is.”

Instead, he prefers taking long positions in equities. “I’d own integrated names or if you want to be more aggressive I think you can look at the drillers,” he says.

As we mentioned above, Goldman sees crude trading at $92 a barrel in three months and $101 per barrel in a year.


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Trader disclosure: On September 14th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BAC), (MSFT); Finerman’s firm owns (BAC); Finerman’s firm owns (GLW); Finerman’s firm owns (HPQ); Finerman’s firm owns (JPM); Finerman’s firm owns (IBM); Finerman’s firm owns (BBY); Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SWN), (SU), (SPLS), (RIG), (UPL); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ARST) calls; Jon Najarian owns (CSCO) call spreads; Jon Najarian owns (RHT) call spread; Cortes is short Crude Oil; Cortes owns (RIMM)

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