Crude oil has 'nowhere to go from here but down,' says market watcher

Crude just posted its best start to a year since 2006, but some traders say the run is unsustainable.

"I'm bearish on crude oil. The production is up over 10 million barrels. That's the highest level since 1970," Phil Streible, senior market strategist at RJO Futures, said Thursday on CNBC's "Trading Nation."

Noting that the most recent federal data showed that U.S. crude production broke 10 million barrels per day in November for the first time since 1970, Streible pointed to crude's significant long position among speculators.

"You've got the net speculative long positions at its highest level since 2006; I think it's got nowhere to go from here but down," he said.

Crude prices have surged 9 percent this year, making January the fifth-straight month of gains. The rally has boosted energy stocks: The XLE energy ETF has rallied nearly 5 percent in January.

The group appears overbought at this juncture, said Matt Maley, equity strategist with Miller Tabak.

"That $78 level … that's key resistance. That's its high from 2016, and its high from last week. If, on its next rally, it can break above that level in any significant way, that's going to be very bullish for the group," Maley said Thursday on "Trading Nation."

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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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