Oil prices fell to a six-week low on Tuesday as dealers anticipated a tropical storm moving over the Gulf of Mexico would miss most major oil and gas installations offshore.
The losses come after the biggest weekly price decline in oil's history last week which chopped $17 off the cost of a barrel as the market focused on mounting U.S. economic troubles and sliding demand.
“I hear investors talk about a commodity bubble bursting,” says Joe Terranova on CNBC’s “Closing Bell,” “but the problem with that is short interest is at its lowest level in 17 months.”
"That’s significant,’" he adds, “because it means longs have already gotten out of the market. If you’re going to have a commodity bubble you need to have it loaded up long to get it to go even further.”
If you watch Fast Money regularly you know that Terranova thinks the oil market will remain around the $130 mark until after Labor Day. "I noticed that below $130 there was some serious institutional buying," he explains. "That suggests there’s a great deal of support at that level."
Meanwhile natural gas is trading at its lowest level in about 3 months.
“The temptation in natural gas is to buy but I recommend sitting on the sidelines for a few weeks,” Terranova counsels. “The buying opportunity should come around mid-August.”
> Trading Oil's Road To Nowhere