Second Quarter Playbook Oil: History May Tell All

SECOND QUARTER PLAYBOOK: OIL

Crude ended the quarter up 17%, closing on Thursday at it's highest level since September 2008.

And pro energy trader Joe Terranova is convinced that for the next 3 months the path of least resistance in oil is higher.

Part of his call stems from the price action of crude during the same period over the last 5 years. Take a look:

Oil's Second Quarter Performance
2006 2007 2008 2009 2010 2011
+11% +7% +38% +41% -9.7% ?

"Historically crude prices appreciate in the second quarter," he says. (Terranova thinks the only reason crude was weak in Q2 2010 was because of the uncertainty generated by the Gulf spill.)

Ontop of that, Terranova thinks technicals are also bullish oil. He's watching $106.95. “It’s the highest we’ve been for the past 30 months,” Terranova says.

And with upcoming elections in Nigeria providing more geo-political uncertainty, he thinks a breakout is entirely possible.

Brian Kelly is also bullish oil. He thinks tight supplies will emerge as a bullish catalyst. As the economy recovers Kelly speculates that we could see a situation similar to 2008 when oil began its long march higher.

What's the trade?

Joe Terranova says to remain long and overweight energy equities.

Tim Seymour agrees. “He likes playing energy with mega-cap EM players like Petrobras and Gazprom .”

Karen Finerman suggests playing the space with oil services names such as Transocean and Pride.

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SECOND QUARTER PLAYBOOK: SOFTS

Corn ended the quarter on a high note, opening at limit up after the latest crop report showed stockpiles fell to their lowest since 2007.

Soft Commodities Performance Q1
Cotton +38%
Corn +10%
Wheat -3%
Sugar -16%

What’s the trade?

Brian Kelly expects soft commodities will continue to climb. He’s playing it long DBA and Monsanto .

Tim Seymour suggests playing it with companies that serve the softs. He likes Syngenta. And he likes grain refiners such as ADM. Also he likes Bunge.

Zach Karabell prefers DuPont which gives you exposure to its seed business as well as its chemical business.

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SILVER SUPERCYCLE?

Hi-ho, silver! The white metal soared 22% over the past quarter -- compared to a flat quarter for gold.

Why is the market switching to the other precious metal? Hear from Peter Schiff of Euro Pacific Capital. Watch the video now!

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Trader disclosure: On March 31, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karabell Owns (AAPL); Karabell Owns (GS); Karabell Owns (MON); Karabell Owns (POT); Karabell Owns (RIMM); Finerman's Firm owns (AAPL); Finerman's Firm owns (FDO); Finerman's firm owns (JPM); Finerman's firm is long (JPM) Leaps; Finerman's firm and Finerman owns (MSFT); Finerman's Firm owns (IWM); Finerman Firm owns (SPY); Finerman's Firm owns (MDY); Finerman's Firm owns (XRT); Finerman's firm is long russell 2000 puts; Finerman's firm is long s&p 500 puts; Terranova owns ( C); Terranova owns (GS); Terranova owns (VRTS); Terranova owns (JPM); Terranova owns (UPL); Terranova owns (MS); Terranova owns (PBR); Terranova owns (BAX); Terranova owns (TEVA); Terranova owns (IBM); Terranova owns (XOM); Terranova owns (JNPR); Terranova owns (AKAM); Terranova owns (DIS); Terranova owns (CVI); Terranova owns (RSX); Terranova owns (CNQ); Terranova is long (AAPL) April 350 puts

For Brian Kelly
Accounts managed by Kanundrum Capital are Long (GLD)
Accounts managed by Kanundrum Capital are Long (SLV)
Accounts managed by Kanundrum Capital are Long (CIL)
Accounts managed by Kanundrum Capital are Long (VLO)
Accounts managed by Kanundrum Capital are Long (PGH)
Accounts managed by Kanundrum Capital are Long (ATW)
Accounts managed by Kanundrum Capital are Long (RDC)
Accounts managed by Kanundrum Capital are Long (RTN)
Accounts managed by Kanundrum Capital are Long (LMT)
Accounts managed by Kanundrum Capital are Long natural gas
Accounts managed by Kanundrum Capital are Long (WPL)
Accounts managed by Kanundrum Capital are Long (FXY) puts
Accounts managed by Kanundrum Capital are Short copper
Accounts managed by Kanundrum Capital are Short (JJC)
Accounts managed by Kanundrum Capital are Short (XLF)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DOM)

For Zachary Karabell
River Twice Capital Owns (CSCO)
River Twice Capital Owns (FFIV)
River Twice Capital Owns (GS)
River Twice Capital Owns (MON)
River Twice Capital Owns (POT)

Tim Seymour SOT 3/2/11
***NO DISCLOSURE ON CAT

For Peter Schiff
Schiff owns gold
Schiff Owns silver
Schiff owns a precious metals dealer that retails to the public

For Christopher Verrone
**No Disclosures

For Brian Stutland
Stutland is Long U.S. Treasuries
Stutland is Long (TLT), short calls and long puts
Stutland is Long Australian Foreign Debt
Stutland is Long (OIH)

For Alan Krueger
**No Disclosures

For Sam Hocking
**No Disclosures

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