The crude oil market is pulling back Wednesday following a historic run that saw oil trade to 13-year highs amid supply disruptions in the wake of Russia's invasion of Ukraine. Veteran trader Mark Fisher may have played a role in Wednesday's sudden sell-off.
"We were going to $120 even without Ukraine," Fisher said Wednesday around noon on CNBC. "What's happened there has just fast-forwarded the whole script."
What Happened: Fisher said people are worried about supply constraints on commodities. Whether it's perceived or real, worry has led to significant runs in oil.
"No one panics until everyone panics, and then when everyone panics, that's when you see these crazy spikes," Fisher said. "Can we go back down $15, $20 from here? Yeah, but do we go to $200? I'm not in the White House, I have no idea."
When asked if he was still long oil, Fisher highlighted the risk-reward potential of the trade.
"Buying the back of the curve and holding it is a better risk-reward trade than going ahead and buying the front of the board at this point and buying, you know, spot crude," Fisher said, suggesting that crude oil prices may be overstretched in the near term.
He told CNBC he expects OPEC to increase supply in response to the Russia-Ukraine conflict, adding that he believes $80 is as low as oil will go.
"I think the days of seeing crude sub-$80 for an extended, extended period of time are over." Fisher said. "I think the bottom of the market ... is $80."
Why It Matters: After Fisher predicted a supply response from OPEC and suggested that current oil prices aren't sustainable near term, crude prices collapsed and he was cut out of the interview.
"There are not many people who move crude. And he did," said Joel Elconin, co-host of Benzinga's "PreMarket Prep" show.
Elconin, who was watching the NYMEX futures at the time, noticed the steep decline, quickly followed by a $6 rebound.
The crash in oil futures Wednesday was an instance of backwardation, which occurs when the price of an underlying asset is higher than the price at which that asset is trading in the futures market.
When Fisher regained the connection to the interview, he told CNBC that he cut out while making a trade, but refrained from providing any details.
WTI Crude Oil Price Action: Front month WTI Crude futures contracts were trading at $115.04 ahead of the interview. By 12:37 p.m. ET, the contracts touched $103.63. At the conclusion of the interview around 12:40 p.m. ET, prices had climbed back to $109.84.
Photo: jp26jp from Pixabay.
