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Macro Traders Fear Shorting Oil Above $100

Thursday, 12 Jan 2012 | 2:40 PM ET

If you’re among those investors who believe oil is ahead of itself, top commodity strategist Michael Harris of Campbell & Company would like a word. His research suggests crude is about to climb in a big way.

Harris cites a slew factors that could signal robust demand and constrained supply. They follow:

Demand Strength

- Although analysts are predicting 2012 will be a tough year for economic growth, China’s declining CPI suggests Beijing should continue to ease

- The ECB didn’t drop rates and the decision not to cut could be a sign the economies of Europe aren’t as bad as feared

- US economic data has been on an uptrend

Supply Challenges

- Mideast tensions are running high especially after Geithner convinced Japan to cut oil imports from Iran

- Nigeria's biggest oil union threatened to shut down oil production, as part of a national strike

- Talk of NATO enforced no-fly zone in Syria

“With the demand picture potentially stronger than expected and possible supply disruptions in the market; oil should climb higher,” he tells us.

However, it’s not just supply and demand that Harris is looking at.

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“$100 is a big psychological level,” he adds. “Since we're above that level in both Brent and WTI - I think we continue higher. A lot of macro-traders just don’t like to be short north of $100.”

Crude to Continue 3-Month Uptrend?
Crude oil is trading near $102 a barrel while nat gas prices continue to slide, touching their lowest level. Is there more room to run for crude oil? Michael Harris, of Cambpell & Company, weighs in.

All told, Harris thinks the environment is conducive for oil bulls. He thinks the run is sustainable.

If you agree with the thesis Pete Najarian suggests playing it long Conoco . “As COP pushes back toward $70 – I like it a lot.”

Steve Grasso prefers Weatherford. "If you believe oil will just hang in, WFT is probably grossly under valued.”



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Trader disclosure: On Jan. 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL; Najarian is long BAC; Najarian is long C; Najarian is long MSFT; Najarian is long INTC; Najarian is long YHOO; Najarian is long MOS; Najarian is long JAG; Cortes is long SO; Cortes is long KFT; Cortes is short Crude; Cortes is short MCD; Cortes is short QQQ; Cortes is short FSLR; Cortes is short XRT vs. S&P long; Weiss owns BRCM; Weiss owns EUO; Weiss is short AAPL puts; Weiss owns MOS; Weiss owns POT; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns WFT; Grasso owns XLU

Brian Kelly
Shelter Harbor Capital is long IWM
Shelter Harbor Capital is long KRE
Shelter Harbor Capital is long XHB
Shelter Harbor Capital is long EWZ
Shelter Harbor Capital is long GLD
Shelter Harbor Capital is long SLV
Shelter Harbor Capital is short Aussie dollar
Shelter Harbor Capital is CDR
Shelter Harbor Capital is UBS

Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own WFT
Stuart Frankel & Co and it’s partners own XRX

Jamie Cox
Cox owns JPM
Cox owns BAC

Willie Williams
No disclosures

Michael Harris
Campbell & Company is long crude
Campbell & Company is short natural gas

Colin McGranahan
Sanford Bernstein has received non-investment banking fees from TGT

Ken Sena
No disclosures

David Palmer
UBS has received non-investment banking fees from SBUX
UBS makes a market in shares of SBUX


CNBC.com with wires.

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