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TheStreet Open House

Quick Take: Oil Enters Hurricane Season

NEW YORK ( TheStreet) -- With oil taking a breather and declining on Wednesday, TheStreet's Joe Deaux spoke to Alan Harry, CEO of Spartan Commodity Partners, about where he sees crude oil headed next.

With inventory drawdowns coming in with a larger-than-expected result, Harry, who only expected a small drawdown, said that this only strengthens the bullish case for oil.

Although the crude oil market was looking weak, it hasn't been able to put in new lows, he said. Because of this, coupled with bullish outlooks on both technical and fundamental perspectives, crude oil should go higher.

Another factor: Hurricane season could have a more profound effect than usual on the price of crude, Harry added. The rationale is simple: With today's larger-than-expected inventory drawdown, we have less oil in our reserves. Should a hurricane force the shutdown of oil production, supply will also diminish.

While lower supply would typically result in higher prices anyway, the lower inventory will only exacerbate the dwindling supply. Thus, Harry concluded, crude oil will go higher should a hurricane take production offline.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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