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Oil Trader: Oil's Headed Higher, Buy Transocean

CNBC.com |
Thursday, 21 Apr 2011 | 1:24 PM ET

Crude oil futures were mixed on Thursday, with Brent slipping and U.S. oil clinging to gains in choppy trading as disappointing economic data from the United States limited the lift from a weakened dollar.

Futures were up, however, since their fall last week after Goldman Sachs warned clients to take profits before oil and other markets reversed.

"I'm an old Nymex guy, so it's nice to see when Goldman Sachs can be wrong," independent oil trader Dan Dicker said on Thursday's Fast Money Halftime Report. "It's less than a week since they put out that note that the trade was over and it was going to drop. On the basis of that note we dropped three-and-a-half dollars, but it's turned right around we're back toward the highs and it looks like it's going steadily higher from here."

So can oil futures continue to push higher, including Brent crude which Bank of America said earlier this week could go to $140?

The Oil Trade
Daniel Dicker, New York Mercantile Exchange independent trader, with a value play on deep-water drillers.

Dicker says yes.

"What we have is, no matter what you call it, whether the inflation trade, risk-on trade or the free-money trade, is a market that continually attracts more and more money and in fact, if the stock market is good, the oil market is going to be good."

Only one thing can drop the market, Dicker said: a financial-based event. Geo-political events aren't going to have a lasting effect, he said.

So what's the trade?

One year after the BP oil spill, Dicker likes Superior Energy Services and Diamond Offshore.

They're going to have to get back to work in the Gulf of Mexico, Dicker said, and in order to get back to work, they'll have to do some containment work.

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"If you're doing containment work, you gotta go through Superior Energy Services. They're the only ones working in some of these containment areas and they're dealing with everyone who wants to get back in the Gulf of Mexico to do ultra-deep-water drilling," he said.

Dicker said Transocean also is a good buy now after the stock was hammered by a $40 billion lawsuit filed by BP.

"The truth is that Transocean has most of the ultra-deep-water floaters that are out there," "The rates that they're getting right now are C-H-E-E-P cheap, and they have to go up."

Fast Money's Guy Adami agreed, adding that he also likes Halliburton as an oil trade.

"Take a look at their earnings the other day — stock initially sold off — that was a rally to buy," Adami said. "Now we're pushing toward $50."

Adami said he also likes Valero as far as refiners go.

Trader disclosure: On April 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Cortes Owns (SDY)Cortes Owns (EXC)Cortes Owns (RIMM)Cortes Owns (GS)Cortes Is Short (IYT)Cortes Is Short (BAC)Cortes Is Short (F)Cortes Is Short Euro vs. Swiss Franc; Kinahan Owns (GE), Is Short (GE) CallsKinahan Owns (MSFT), Is Short (MSFT) CallsKinahan Owns (CSCO), Is Short (CSCO) CallsKinahan Is Long VIX CallsKinahan Is Short (SLV) Call SpreadsKinahan Is Short (WFC) Call SpreadsKinahan Owns (F), Is Short (F) CallsKinahan Is Short (AMGN)

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (DIA)
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (ARMH)
Accounts Managed By Brian Kelly Capital Own (BCSI)
Accounts Managed By Brian Kelly Capital Own (CLNE)
Accounts Managed By Brian Kelly Capital Own (EBAY)
Accounts Managed By Brian Kelly Capital Own (JJG)
Accounts Managed By Brian Kelly Capital Own (JNPR)
Accounts Managed By Brian Kelly Capital Own (LMT)
Accounts Managed By Brian Kelly Capital Own (MON)
Accounts Managed By Brian Kelly Capital Own (SU)
Accounts Managed By Brian Kelly Capital Own (TSN)
Accounts Managed By Brian Kelly Capital Are Long Silver
Accounts Managed By Brian Kelly Capital Are Long Gold
Accounts Managed By Brian Kelly Capital Are Long Wheat
Accounts Managed By Brian Kelly Capital Are Long Soy
Accounts Managed By Brian Kelly Capital Are Long Natural Gas Futures

For Dan Dicker
oil, NYMEX, BP, Superior Energy, DO, RIG

Accounts Managed By Kanundrum Capital Own (RVBD), (CAF)


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