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Oil will ‘massively disappoint’: Macro investor Raoul Pal

Macro strategist Raoul Pal on the dollar, crude oil, bonds, and more

Oil extended its earlier losses in Friday trading on concerns about production. At session lows it was down $1 a barrel.

And crude will likely continue to slide much, much lower, according to Raoul Pal, a macro investor and strategist, and founder of financial publication The Global Macro Investor.

Pal said in a wide-ranging interview Wednesday on CNBC's "Trading Nation" that speculative positioning on oil futures contracts is the "biggest in all of history."

He also noted that the price of crude and the U.S. dollar have been rising and falling in tandem recently (historically a rare pattern between the two as a stronger dollar is generally a negative for dollar-denominated crude).

"And so it makes me think that if speculators are record long, and it's diverging from what the dollar's doing, and I think the dollar goes up, then I think on balance, over this year, crude will massively disappoint to the downside," Pal said.

OPEC and other producers, including Russia, have agreed to a production cut of nearly 1.8 million barrels per day to alleviate a global supply glut of crude, but U.S. production has risen so far this year, giving some oil traders pause.

The dollar will continue to appreciate this year, rising another 25 percent against a basket of major currencies, due to President Donald Trump's protectionist trade policies, Pal forecast.

Since a rising greenback tends to mean falling oil prices, this provides Pal with another reason to be bearish on crude.

All in all, "the probability is that crude oil will go lower, not higher, this year," he said.