NEW YORK ( TheStreet) -- Crude oil has been trading within a tight range during the past quarter as demand has not been strong enough to meet the supply glut, and yet oil prices could reach $70 in July, according to one options trader.
On Tuesday, James Cordier of OptionSellers.com told The Street TV that in the next four to eight weeks crude supplies in the U.S. will finally start to come down significantly, driving the price of crude higher.
Crude inventories have seen drawdowns during the past seven weeks, and Cordier said refined products should be the next to see supply moving lower. Crude will see more drawdowns over the next two to four weeks and gasoline will see the same by the end of August, Cordier said.
He explained that because the Organization of Petroleum Exporting Countries hasn't cut production, crude oil pressure has remained under pressure.
In terms of a trade in crude, Cordier and OptionSellers.com sell options in the opposite direction they think the market will go. Since Cordier is bullish on crude, he is selling puts into the end of the driving season and is comfortable being long $10-$15 below the market.
That is a neutral-to-bullish strategy that attempts to take advantage of elevated volatility in the underlying commodity as an opportunity for a premium sale. Conversely, in October to December, when gasoline demand wanes, Cordier would make the opposite trade.