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Bottom Of The Barrel

Over the last 3 months oil prices climbed about 11% with crude marching higher on Tuesday before paring gains. The move halted a two quarter losing streak and gave oil bulls reason to celebrate.

But the party might be over before it really starts; gains may be fleeting after the market gets weekly inventory data on Wednesday.

Addision Armstrong of Tradition Energy tells us, "Wednesday's release of the weekly U.S. government inventory data is likely to show that crude supplies -- already 12 percent above the five-year average level -- probably grew by 3.5 million barrels." In other words supplies will increase – a bearish scenario for crude.

In fact, supplies are growing so quickly that storage facilities are brimming with more oil than they've had in 16 years. Combined with the strategic petroleum reserve, the nation now has 1.05 billion barrels of oil in storage.

To put that in perspective that’s enough oil to fuel roughly 44 million cars for a year.

So what lies ahead?

“Analysts expect another choppy 3 months,” explains CNBC’s Sharon Epperson.

There’s an abundance of variables at play; oil supply in the US is enormous however OPEC production cuts will start to work their way through the system.

Also refining capacity will be growing with a new refinery coming online in India.

Considering all those influences Addison Armstrong is overall bearish. ”I think we’re stuck in a range but the overall direction we’re heading is probably lower,” he says. “When the June contract breaks below $50 I think we could head to $45 pretty quickly.”

But no matter how you slice it, it all comes down to demand. And it seems likely that every little bit of economic data could move the energy markets in the quarter that lies ahead.

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Trader disclosure: On Mar. 31st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (GS), (SDS), (AAPL), (POT), (MOS), (SDS); Macke Is Short (BRK.s); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (BAC), (FXI), (FCX), (TSO), (EEM), (TTM), (WBD); Najarian Owns (AAPL) Call Spread; Najarian Owns (BNI) Call Spread; Najarian Owns (HUM) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (NTRS) Call Spread; Najarian Owns (PALM) & (PALM) Calls; Najarian Owns (POT) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (RIO) Calls; Najarian Owns (VCLK) Calls