Top Energy Trader: Crude’s Next $5-$10 Move Is Lower

Concerned that gains in oil are unsustainable? You’re not the only one.

In fact, we’re hearing chatter that’s it may be time to go short.

Top trader Rich Ilczyszyn of Lind-Waldock reveals in a live interview on CNBC’s Fast Money that he’s telling clients upside is limited in the short term. He thinks the next $5-$10 in crude will be lower.

Why?

He sees a number of negative catalysts:

- First he says that speculators now own as much oil as there is in the SPR. “We’re taking about a lot of investment at oil,” he says.

- Also he’s concerned by a decrease in volume, especially on days when oil closed higher. “Volume is down 30% over the last couple of days,” he says.

- In addition, Ilczyszyn doesn’t like that other commodities such as gold and silver closed higher but oil didn’t.

- And then there’s the fundamental headwind generated by China’s rate hike.

”What does that all tell me? I think we’re getting into a lofty area, that the market is over-saturated,” he says.

To confirm his thesis, Ilczyszyn says to watch the S&P on Friday. “If the market closes lower on the week I would take it as confirmation (that oil wants to go lower.)

It’s worth noting that long term, Ilczyszyn is bullish and this is largely a trading call. But in the near term, he sees “a real good case for oil to sell-off a bit here.”

What do you think? We want to know!

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Trader disclosure: On April 5, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman and Finerman's Firm own (AAPL); Finerman and Finerman's Firm own (CVS); Finerman's Firm owns (HPQ); Finerman and Finerman's Firm own (MSFT); Finerman owns (USO); Finerman's firm owns (IWM); Finerman's firm owns (SPY); Finerman's firm owns (MDY; Kinahan Owns (WAG); Kinahan owns (CSCO); Kinahan owns (F), is short (F) calls; Kinahan owns (MOS), is short (MOS) calls; Kinahan owns (ORCL); Kinahan is short (SPY) through options; Kinahan is long (XLB) puts; Kinahan is short (YHOO) puts; Adami owns (AGU); Adami owns (C ); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova owns (C); Terranova owns (VRTS); Terranova owns (JPM); Terranova owns (UPL); Terranova owns (PBR); Terranova owns (TCK); Terranova owns (BAX); Terranova owns (XOM); Terranova owns (AKAM); Terranova owns (CVI); Terranova owns (CNQ); Terranova is long (NFLX) puts; Terranova is long (POT) puts; Terranova is long (F) puts; Terranova is long (VLO) puts; Terranova is long (CAT) puts

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