Is it time for crude prices to fall back to earth? That was a question Fast Money traders were asking Monday morning as crude prices pulled back from 2 ½ year highs on hopes for a Libyan cease-fire and news of a new 6.6 aftershock in Japan.
WTI crude futures were down more than half-a-percent mid-day Monday, falling to $112 per barrel after rising as high as $113.46. Brent crude futures were also down, dropping from an intra day high of $127.02 per barrel to just above $126.
Fast Money contributor Dennis Gartman, of the Gartman Letter, was betting the pullback would be short-lived.
“All internal components of the futures market say this is still a bull market,” said Gartman in an interview ahead of his appearance on tonight’s Fast Money at 5PM.
Gartman noted that the annual spreads in WTI crude were backwardated, a bullish futures pattern in which the futures contract is less than the expected future spot price. When futures are backwardated, investors are willing to pay a premium to keep the commodity out of storage, indicating strong demand.
Energy broker Chris Motroni was also betting that oil prices would continue to climb, despite Monday’s softness. Motroni, founder of Heritage Energy and a guest on Fast Money’s halftime show today, believes the next natural level of resistance for WTI crude is the $123 per barrel high, hit last spring.
“This is a news driven market,” said Motroni, explaining the strength in energy prices despite record U.S. crude inventories. “How long do you believe anything that is going on with GaddafI?”
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Trader disclosure: On April 11, 2011, 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); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Weiss is short (X); Weiss is short (RTH); Weiss is short (IWM); Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (DVN); Weiss owns (COP); Weiss owns (BTU); Weiss owns (JPM); Weiss owns (MSFT); Terranova owns (JPM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (TCK); Terranova owns (BAX); Terranova owns (XOM); Terranova owns (AKAM); Karabell owns (AAPL); Karabell owns (BHP); Karabell owns (BIDU); Karabell is long (GOOG); Karabell owns (GS); Karabell owns (MRVL); Karabell Owns (SINA); Seymour owns (AA); Seymour owns (AAPL); Seymour owns (F); Seymour owns (INTC)
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