The oil carry trade has been a big driver of the crude market in the last three years. Once in a while, that carry trade can influence the whole market, without regard for anything else -- and I believe we're entering that moment. That means that the rally in oil, as much as it looks like it needs to be sold, will probably show some incredible and unexpected strength, and the related stocks will be a good place to be.

Commodities are not like stocks, I am so fond of saying, and oil is an even more peculiar commodity than most. All commodities price based on the futures markets, different from other asset markets. In the futures markets, there are individual contract months that expire, get delivered and are replaced by months further forward on the "curve."

Because each month can trade independently, it sets up a series of prices for oil, not just one as you find with a stock. This series, or curve of prices, can go up or down as time passes -- sometimes it does a little of both! But for the past several years, and for reasons too complex to explain in a short column -- (Buy my upcoming book,

The Endless Bid

, published by Wiley this fall!) -- the curve of prices has gone universally up over time, a condition we call a "contango" curve.

Because of the overwhelming investor interest in oil and the "risk trade" that definitely goes with it, a lot of investor money enters the oil market through the spot months -- the ones very close to the front of the curve. These are the most liquid, but also the most volatile months -- when money leaves the oil market quickly; it comes almost entirely out of the front months where all this investor interest is located, leaving the back months less affected.

What that does is increase the premium of prices for crude far back in the curve compared to the prices in the front months. The differentials can get huge, what we would call a steeply sloped curve. With oil, there is a physical opportunity that is gained with a steepening of the contango curve -- through storage.

In essence, physical players in the oil market suddenly have a financial reason to refuse delivering crude oil into a market in deep contango -- why sell oil today when the prices you can get for it are almost $10 higher only six months from now? The answer is, you don't if you aren't in a lock-tight contract for your supply. Whatever inventory you have that is not already contracted can be stored and hedged for delivery at a later date -- or you can simply turn off the spigot and add delivery at a later date. Either way, the upshot into the market is the same -- physical oil suppliers stop selling prompt barrels -- the selling dries up.

And when the selling dries up, the market has only one way to go, particularly if there are a pile of shorts already in the market looking for a commodity crash. We've had three of these scenarios in the last nine months already, with the biggest downdraft and subsequent rally in 2009, when the oil contango went to more than $15 (!) in March. At that time, oil rallied almost consistently from $32 to close to $90. With the six-month contango out to $10, I am looking for a significant rally in oil here.

There are two ways to play this; through the futures in spreads and with stocks. Selling back month futures while buying front months is the most direct way to play it, but if you cannot fathom futures trading, you could buy the energy ETFs and sell the overall market ETFs, looking for the energy sectors to outperform the general index. Or, you could just buy energy names.

One downtrodden energy name I'm looking at is


(BP) - Get Report

. I know, I know -- I was the guy who told you to stay away from this one at all costs. But I am convinced that this stock goes down every day, until the

day before

the leak in the gulf if fixed (leak? I should say spume!). But I am convinced that the day that oil spill is corralled, BP will rally $4. I am looking at buying shares of BP while selling $50 covered calls above it, taking the premium and dividend and waiting for the spill to be contained.

The oil carry trade will inspire a sustainable rally in oil. Now's the time to take advantage of this coming turnaround.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks.

Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years.

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 as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals.

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