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TheStreet Open House

Dicker: Crude Oil Is Going Higher

Stocks in this article: DVN PXD BCEI XEC

NEW YORK ( TheStreet) -- I was talking with Stephanie Link this morning about the crude oil market and a couple of indicators I think are pointing to a higher price in the next few weeks.

Even though oil is over $106 a barrel and most analysts believe that we are at the top of the crude price range, there are a few indicators that I see in the futures market that tell me that the price is not finished going up.

One is what commodity traders call the "curve" of prices. Futures are priced in monthly deliveries and each month becomes a separate contract, with a separate price, as if each month was an individual stock. How those prices relate to each other is called the "curve."

What's interesting about the current curve is a condition called a premium market, or a backwardated market. That means that the prices drop as you move out along the curve. You might naturally think that if prices are going down as you go further out in time, that would indicate a bearish outlook, but in fact, most bull markets in oil have been accompanied by a backwardated curve.

Other numbers in the futures market indicate a stronger crude price going forward being more likely.

Two of them are the increasing open interest, or increasing participation from investors in the futures market, and also the way the spreads between the months are currently trading.

Both of these indicators are a bit technical and I discuss them and some of the stocks I am looking at to capitalize on higher oil with Stephanie Link in the video above.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

Dan is currently President of MercBloc LLC, a wealth management firm and is the author of "Oil's Endless Bid," published in March of 2011 by John Wiley and Sons.

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on CNBC, Bloomberg US and UK and CNNfn.

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.

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