Oil Could Be Close to a Near-Term High
West Texas Intermediate crude oil futures are trading in the mid-$50s per barrel, but they might not go much higher, commodities trader Carley Garner says.
"Technically, there's some resistance in the mid-$50s, between $55 and $56," Garner, a futures and options trader at DeCarley Trading and a columnist for TheStreet's Real Money Pro premium site, said at TheStreet's Financial Success Strategies.
Garner noted that oil is regarded as more volatile than other commodities, largely because contracts expire monthly. Most other commodities have only three or four expirations a year.
"Crude-oil futures have a tendency to follow the direction of the trend near expiration dates," Garner said in an interview with TheStreet following this weekend's event. She added that the reason for the increased trading volume is due to traders scrambling to get into the next contract month.
"If we're still up in the low- to mid-$50s two weeks from now, we'll probably get a big spike up," the expert said, adding that the spike would flush all the weak shorts out. "Then from there, I think we'd have a good chance of turning around. But that level could be $56 [or] $57 before coming off."
Garner's advice to investors, particularly someone new to futures trading, is to look "for cheap out-of-the-money calls and puts," as well as cheap options.
