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Terranova: Trading Oil's Momentum

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If the S&P 500 finishes positive this month it will be the third straight monthly gain for the index -- matching it's longest winning streak since 2007. That's according to Rich Peterson at Standard & Poor's.

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But take a look at oil over the same 3 month period. Crude has actually outperformed the S&P to the tune of almost 20%.

So what’s the trade?

Considering inventories are high and demand is tepid at best, the fundamentals do not support oil at $62, explains Fast Money commodity trader Joe Terranova.

But momentum is driving crude right now – not fundamentals. And there’s clearly paper demand for oil as an asset, Terranova explains.

With so much resiliency in the face of otherwise negative influences, stay with the trade that’s working, Terranova counsels. For the time being, that’s a bet on oil prices going higher.


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