Crude Climbs, but Traders Cast Doubt on Rally
Although oil marched toward $111 a barrel on Tuesday, its highest level in nearly two weeks, some professional traders doubt it will continue to climb.
While a slightly weaker U.S. dollar may have lured some investors, pro trader Anthony Grisanti argued it has more to do with the technicals. In the last few sessions, oil has found support at $90 a barrel, he noted. Between a glut in oil supplies and a sluggish global economy, he doesn't think crude will push much higher than current levels.
(Read More: Brent Crude Climbs Toward $111)
In turn, Grisanti recommends selling the rally in crude. He plans to sell the April crude futures contract at $93.80 with a target of $90.50 and a stop at $95.20.
From the trading pits at the Chicago Mercantile Exchange, pro trader Jim Iuorio agreed the pop in crude can be attributed to both dollar strength and technicals. He also plans to sell the strength in crude.
(Read More: Strong Dollar Flashing a Warning Sign)
Meanwhile, Rich Ilczyszyn of iiTrader dug deeper into the technicals, noting that crude hit an intraday high of $92.28, pushing it above the 100- and 200-day moving averages. If crude is able to close above the $90.90 level, he thinks it could test $94.22 a barrel. He recommends traders continue to play the range between $91 and $92 a barrel by buying dips and selling rips.
Brent crude was up 50 cents at $110.72, after slipping to $109.55 earlier. U.S. light, sweet crude was up $1.05 at $93.11.
(Read on for 10 Things You Need to Know to Trade Futures)