Global economics may be pushing oil lower, but this strategist says political forces will limit its fall, and she has a trade on that view.
Sure, Europe's a mess. And sure, global demand for oil has been getting softer. But Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional, says there's a flip side.
"What drives oil supply? A lot of it is going to be geopolitics," she says. At the latest OPEC meeting, "what they told us is they're comfortable with current prices."
Patterson argues that oil producers have an interest in keeping oil prices at a certain level, since they need to fund their budgets and maintain social stability. If oil drops much lower, she told CNBC's Melissa Lee, "I think they'll intervene to support it. I don't think oil goes a lot lower."
To trade that view using currencies, Patterson recommends selling the dollar against the Canadian dollar since Canada's economy is so closely tied to oil. Specifically, if the greenback moves to 1.0450, she wants to sell it against the Canadian dollar with a stop at 1.0525 and a target of 1.0150.
Todd Gordon, co-head of research and trading at Aspen Trading Group, likes the trade from a technical standpoint. "I think oil is a pullback buy, I think the dollar downtrend continues," he says.