Fast Money

Monday - Friday, 5:00 - 6:00 PM ET
Fast Money

Next Stop for Oil - $88.55


Wondering how much lower oil can fall? How about $88.55.

Top energy trader Addison Armstrong says the next key technical level to watch is $88.55, a Fibanocci level. “It’s the 61% retracement of the October to March rally,” says Armstrong.

And moves in the dollar/euro cross could provide valuable insights  as you try to anticipate whether those levels hold or break.

“The trend lines between the euro/dollar and oil have been cemented over the past few weeks. As the euro sank below 126, it was very negative,” he says.

That’s because a stronger dollar makes commodities nominated in dollars such as oil more expensive for buyers using other currencies.

Also, if you’re hoping that forthcoming economic data sends oil back on its march higher – you may be disappointed.

Armstrong says it seems a lot of the premium in oil earlier was due to concerns about Iran, which have started to abate – and not a bet on the recovery.

“There was a lot of conversation about supply disruptions in the Mideast,” adds trader Mike Khouw. Now that seems much less likely.

“And don’t forget there’s a lot of production going on in North America. Kansas alone may have 15 billion barrels of reserves."

Increased supply would also be bearish for crude.

You can find our conversaton with Armstrong about 10 minutes into this video clip.

Posted by CNBC's Lee Brodie

Got something to to say? Send us an e-mail at and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to

Trader disclosure: On May 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GLD; Josh Brown is long GDX; Josh Brown is long XLU; Tim Seymour is long BAC; Dan Nathan is long APPL JUN 550/520 PUT SPREADS; Dan Nathan is long IBM JULY 200/185 PUT SPREADS; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is long JAKK; Karen Finerman is short SPY; Karen Finerman is short MDY; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long MS CALLS; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long PEP; Pete Najarian is long HPQ; Pete Najarian is long FB

For Doug Sipkin
SFG is a market maker in the securities of Morgan Stanley: MS

For Amelia Bourdeau
Nothing to disclose with wires.