A ‘sell’ opportunity for oil could be a few dollars away, says trader

Oil on Monday logged its eighth straight day of gains, its longest such streak in five years, but one commodities trader sees a chance to sell crude in the near term.

"I am long-term bearish oil, but I'm staying out of the way until $47 to $48 [per barrel]. At that point, we could see a good sell opportunity," Bill Baruch, senior market strategist at iiTrader, said Monday on CNBC's "Trading Nation."

U.S. West Texas Intermediate (WTI) crude, trading at $46.84 per barrel on Monday, has fallen nearly 13 percent year to date as a global supply glut and a lack of production cuts have driven down prices. Yet after five straight weeks of losses, which were met by an increase in short positions, oil prices rose 7 percent last week.

The Commitments of Traders data, provided by the Commodity Futures Trading Commission, showed short positions nearly doubled last month, thereby making net long positions in oil futures the smallest since August 2016, Baruch pointed out. Market positioning is often used as a contrarian indicator, meaning that increased bets against oil make other traders want to get long.

The rise in oil came as the total number of producing rigs fell last week for the first time since January, according to Baker Hughes data. Yet U.S. production climbed, which could further tamp down oil prices.

In CNBC's latest oil survey, just over half of participants said the Organization of the Petroleum Exporting Countries has lost control of the oil market, and crude will likely set a bottom in the low $40 per barrel range.

At the same time, 60 percent of participants said OPEC will likely continue its efforts to talk up oil prices.

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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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