In this sneak peek from the Action Alerts PLUS investing club, futures and commodities broker Carley Garner broke down her outlook for oil.
Related: Good news for bulls - Here's how the S&P 500 could soar to 4,700
FULL VIDEO TRANSCRIPT BELOW:
J.D. DURKIN: Brent crude futures hitting their lowest level since at least August this week. Do you expect that downturn, specifically, and a bit of that downward pressure to continue?
CARLEY GARNER: When oil started to rally on news of violence in the Middle East, it failed to break above 95. And I knew then that this market was probably in trouble. The market was just too long in the 90s. Speculators were buying on the news. And then they ended up selling on the fact, which is generally what happens.
Often, when you get violence in the Middle East that causes a crude oil rally, speculators are disappointed, because usually the supply disruptions that the markets are pricing in don't materialize. And then we get liquidation of that trade. And so often, the price of crude oil is often lower at the end of the news cycle than it was in the beginning, which is ironic, because just from a fundamental standpoint, that's probably not how most people would expect it to work. But that's how it works more often than not.
The numbers we had coming into the last week or two as support were 76, which we surpassed yesterday. Our next number is about 72, 71. I do think we see the low 70s. So if you're bullish, maybe exercise a little patience. We're getting a little bit of a technical bounce here over the last couple of days, but my best guess is that's not going to last.
Seasonally, crude oil generally trades lower from mid-October through mid to late December. So I'm not in any hurry to get bullish, but I do think once we do get into the 70s, it's probably a good value play.
J.D. DURKIN: Absolutely. Brent's at 81.10 as we're currently having this conversation. We'll track it very closely.
