While traders were obsessing over the lack of stock market action in the first quarter, the price of West Texas Intermediate Crude moved over $100 a barrel. It’s a meaningful breakout for black gold which hadn’t found a firm foothold in the triple digits since the third quarter of last year.
Optimists would think the global tensions in Ukraine and the absurdity that was last winter would have trumped Summer Driving Season’s annual increase in the rise of crude. Colorful CME trader Tres Knippa thinks crude is a raging buy at $100.
“There’s been tension in the Middle East since the earth cooled,” Knippa observes in the attached clip, “so I’m kind of counting on that to continue.” As for the much vaunted glut of WTI in the U.S., Knippa sees little evidence of any such thing exists in the pits. “The glut is simply not there and whoever’s models are anticipating that I’d have to disagree with them.”
If the above freaks you out you’re better off not hearing Knippa’s price targets. He says crude could be approaching $125 or $130 without any outside help. A little uptick in the Middle East would bring $150 into play and the previously unthinkable $200 level is a possibility if the world really comes unhinged.
He’s loathe to put a timing target on the uptick but he’s more than happy waiting it out while crude bubbles. Until he sees a reversal in premiums being paid in the commodity pit, Knippa’s confident we’ve seen the last of WTI crude in the $80s.
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