×

Pro Trader: Here's Why Oil May Soon Break Higher

Oil futures held near $90 a barrel in midday trading Tuesday despite the International Energy Agency having cut its estimate for demand growth and raised its supply forecast, countering support provided by rebounds in the euro and in stock markets.

Amid it all, trader Brian Kelly is looking for a break-out.

After all, Kelly noted several tropical storms and hurricanes helped reduce supply in the past month. When these storms stuck, it shutdown oil wells in the Atlantic Ocean and shuttered refineries along the U.S.'s Eastern Seaboard, as well.

Meanwhile, the Federal Open Market Committee is scheduled to meet soon. The FOMC is the branch of the Federal Reservethat determines the direction of monetary policy.

"It's looking increasingly likely that they will most likely have some form of quantitative easing or at least easing of monetary policy, which could get crude oil going again," Kelly explained.

Finally, Kelly pointed out that there continues to be unrest in the Middle East.

"You have Egypt and Israel with some very worrisome signs going on there and you don't even need demand increase," Kelly argued. "You just take out the supply and you have higher oil prices."

Kelly is founder of Kanundrum Capital and a "Fast Money" contributor.

______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Sep 13 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (XOM); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (ORCL); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (GS); Terranova owns (DAR); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (CAT); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX); Cortes is long (SO); Cortes is long Treasuries; Cortes is long Yen; Cortes is short Gold; Cortes is short Aussie; Cortes is short Corn; Patty Edwards is long: Tech SPDR XLK

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (RLI)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC

For Patty Edwards:
Trutina Capital is long Amazon (AMZN)
Trutina Capital is long Apple (AAPL)
Trutina Capital is long Citigroup (C)
Trutina Capital is long Google (GOOG)
Trutina Capital is long McDonalds (MCD)
Trutina Capital is long Oracle (ORCL)
Trutina Capital is long Qualcom (QCOM)
Trutina Capital is long SPDR Gold Trust (GLD)
Trutina Capital is long Yum Brands (YUM)
Trutina Capital is long Microsoft (MSFT)
Trutina Capital is long (CAT)

For Brian Kelly
Accounts managed by Brian Kelly Capital are long Euro
Accounts managed by Brian Kelly Capital are long tlt
Accounts managed by Brian Kelly Capital are long slv puts
Accounts managed by Brian Kelly Capital are long mcp
Accounts managed by Brian Kelly Capital are long mon
Accounts managed by Brian Kelly Capital are long Jjg
Accounts managed by Brian Kelly Capital are short Jjc
Accounts managed by Brian Kelly Capital are short us dollar
Accounts managed by Brian Kelly Capital are short FXA

For Brian Sozzi
**No disclosures

For Win Thin
**No disclosures

CNBC.com with wires