Is It the Bottom Of The Barrel?

Oil prices rose on Thursday as hopes that the White House would move quickly on an economic stimulus package outweighed flagging demand and rising inventories in the world's top consumers.

"In the last week, I've seen investor confidence improving, with the new Obama administration now installed ... I feel that if this confidence continues, it will spill into more (consumer) buying and that will improve demand for gasoline and other energy products," says Mark Waggoner, president of Excel Futures.

Fast Money trader Joe Terranova echoes that sentiment.

He tells us the bottom is in. “If you’re playing it from the short side you probably want to cover your position,” he says.

According to Terranova, technical indicators and fundamental indicators both point to oil moving higher.

Here’s his thesis:

Technicals: Oil couldn’t take out its December low of $32.40.

Fundamentals: We’re filling up the SPR and OPEC cuts are starting to work. Also commodity funds are rebalancing.

How should you trade?

If you’re looking for a trade look at big oil, counsels Terranova. “I’d be a buyer of big oil on bad earnings. Maybe look at Hess and stay away from the United States Oil Fund .”

Of if you’re looking for an emerging markets trade Tim Seymour recommends Lukoil and Petrobras.

I’m long oil related assets and short the USO as a hedge, adds Karen Finerman.

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Trader disclosure: On Jan. 22nd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI); Macke Owns (MCD), (BAC), (C), (TM), (SDS); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (MSFT), (UNH), (AET); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (ANF) with wires