Oil Should Move Lower On Tuesday

Oil prices soared nearly 16 percent to over $120 a barrel on Monday -- the biggest one-day gain on record — as anxiety over the government's $700 billion bailout plan, a weak dollar and an expiring crude contract ignited a dramatic run.

But Tuesday's move should be to the downside. Here's why.

"Normally the spot contract trades about 300,000 contracts a day, explains Joe Terranova on Fast Money. But the final volume at the end of Monday's trading in October’s expiring contract was just ten percent of what it usually trades."

Terranova goes on to say that the weak volume suggests to him that the spike was probably somewhat temporary; someone was looking to buy because they had to. Phil Flynn, analyst and oil trader with Alaron Trading Corp. in Chicago, suggested the late-session surge was fueled by a large investment fund scrambling to cover their short positions.

"The direction that oil will take long-term is probably higher, but not as aggressively as Monday’s price move would suggest," adds Terranova.

Forget the price of crude, counters Pete Najarian. If you’re looking for a trade, check out BakerHughes, he says. They’ve pulled back and I think the move presents a buying opportunity.

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Trader disclosure: On Sept 22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Pete Najarian Owns (AAPL) And (AAPL) Puts; Pete Najarian Owns (ETFC), (MYL); Pete Najarian Owns (MS) And (MS) Puts; Pete Najarian Owns (RIMM) Call Spread; Pete Najarian Owns (TSO) Call Spread; Pete Najarian Owns (WB) Put Spread; Finerman Owns (GS); Finerman's Firm Owns (RIG), (PDE), (WM), (MO), (MSFT), (SUN), (TSO), (VLO); Finerman's Firm Is Short (VNO), (WFC), (IYR), (IJR), (MDY), (SPY), (IWM), (BBT), (COF); Seymour Owns (AAPL), (COP), (ETFC), (MER), (TSO); Seygem Asset Management Owns (PTR), (EEV); GE Is The Parent Company Of CNBC; Charles Schwab Is A Sponsor Of "Fast Money"

Terranova Owns (NOV), (EOG), (FTO), (VLO), (POT), (AAPL), (KOL); Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (BRE), (CNTY), (CNW), (CLB), (OFC), (DLM), (DRH), (DLR), (EPR), (ESS), (EXR), (AGM), (FL), (GBL), (GNET), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (GWX), (SSYS), (SKT), (UA), (BIV), (VV), (BLV); Phoenix Investment Partners Owns More Than 1% Of Goldman Sachs Financial Square Fund - Money Market Fund; Phoenix Investment Partners Owns More Than 1% Of Seagate Technology Tax Refund Rights.

Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)