Oil is driving everything right now: Strategist

Nowadays, everything comes down to oil.

At least, that's the way that Boris Schlossberg of BK Asset Management sees it. He says that right now, global markets, currencies and U.S. stocks are all taking cues from the price of crude.

"All of the markets are focused on the price of oil as a sign as whether risk is on or risk is off," Schlossberg said on Tuesday. "If oil starts to rally, that's a signal to the market that demand is coming back. It's as much a game of psychology as economics at this point."

Oil settled up 4 percent Tuesday, while the S&P 500 gained 1.4 percent, led by energy stocks.

Schlossberg said stocks and oil will continue to move in tandem until the price of crude stabilizes. And fortunately for investors, he said oil could see a relief rally on signs that the Organization of the Petroleum Exporting Countries is cooperating with non-OPEC countries to limit supply.

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"I got the feeling that Saudi Arabia has decided that this is it, that $30 has got to hold, they just can't have it any lower than that," Schlossberg said in a "Trading Nation" interview. "If they communicate to the market that they're going to contain supply, that'll be enough for a short squeeze."

But Phillip Streible of RJO Futures still sees more pain ahead for oil, thanks to record inventories and dwindling storage space.

"I think oil prices still have a ways to go lower," Streible said Tuesday on CNBC's "Trading Nation." "Once we get the credit crisis coming out of the U.S. shale producers [and] the production levels come down a bit, then I think we are closer to that bottom."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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