Don't Get Too Used to $79 Oil

Wondering just how much lower oil prices will likely fall? With crude trading around $79, we’re hearing not a lot.

Ed Morse, Citigroup Head of Commodities Research tells us crude looks like it’s oversold and there are a slew of catalysts on the horizon that will send it higher.

Number one is summer driving. “Demand for crude increases substantially between now and August,” he explains on CNBC's Fast Money, as Americans take vacations.

Also he thinks demand has been lower than expected due to maintenance issues. “There’s been a delay in refineries coming out of maintenance and that’s put downward pressure on demand, too,” he says.

And he sees supply coming out of the market. “The Saudis are expected to send less supply onto the market” over the summer.

It’s widely believed that Saudi Arabia has sent additional oil onto the market allowing in an attempt to subordinate Iran.

However, with a ban on Iran imports expected to go into effect on July 1st, Saudi Arabia will probably dial back the spigots.

All told Morse says the path of least resistance is higher. “Over the next 3 months oil (WTI) should average around $90,” he says.

If you're looking to trade the thesis, energy trader Joe Terranova suggests a long position in Hess, which often moves in tandem with the spot price of crude.

Posted by CNBC's Lee Brodie

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Trader disclosure: On June 26, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long USB; Joe Terranova is long TCBI; Joe Terranova is long SBUX; Joe Terranova is long WMB; Joe Terranova is long SJM; Joe Terranova is long UPC; Joe Terranova is long WFM; Joe Terranova is long LPX; Joe Terranova is long SNDK; Joe Terranova is long IBM; Joe Terranova is long HYG; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long CNX; Steve Grasso is long ASTM; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long VLO; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Mike Murphy is long INTC; Mike Murphy is long TGT; Mike Murphy is long LNG; Mike Murphy is long SBUX; Mike Murphy is short WMT; Simon Baker is funds long AAPL; Simon Baker is funds long CVX; Simon Baker is funds long WFC; Simon Baker is funds long V; Simon Baker is funds long DIS

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