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Crude oil has snapped its best weekly win streak in four years.
The commodity has plummeted 5% since Monday, its first negative week in eight. Losses accelerated on Friday after President Trump said he called on the Organization of Petroleum Exporting Countries to act to bring global oil prices lower.
Bill Baruch, president of Blue Line Futures, says the sell-off in oil won’t last long.
“I’ve been very upbeat on crude oil since February. This hasn’t changed,” said Baruch on CNBC’s “Trading Nation” on Friday. “The uptrend is still intact. There’s a trendline from December that is right at $63 [and it closed below it]. But that doesn’t mean it’s over.”
Crude oil for June delivery fell below that trendline to settle at $62.87 a barrel.
“There’s another trendline from February that comes in right around $61,” said Baruch. “As long as it stays above $61 on a technical basis, you can get the golden cross and then another overall tailwind.”
Baruch adds that $60 is also important as a psychological area. So long as oil holds above that level, there will be buyers, he says.
Gina Sanchez, CEO of Chantico Global, is more cautious on crude oil prices as the economy faces a slowdown.
“If you take a step back and look at the broader trend, in fact a lot of the big trends were pointing towards lower oil prices. If you look at demand, demand has been falling, exports have been falling, trade has been falling. They’re very slow moving but they are actually going in the wrong direction,” said Sanchez on “Trading Nation” on Friday.
A move lower would actually help the oil market right now, says Sanchez.
“Right now it’s cyclically tight on the demand side and on the supply side so anything to alleviate the pain while the driving season gets going is probably a good thing because in fact, in the longer run, if you hurt demand today with really high oil prices, you could actually end up with a lower expectation going forward,” she said.
While Baruch is bullish on the commodity, he says the energy stocks are stuck in a rut.
“There’s a nice ascending channel but it hasn’t been able to break out above that… Now we’re on the bottom side of that channel,” said Baruch. “My fear is the [XLE energy ETF] does go below that channel trendline support and then it can go lower. “
Energy is the only S&P sector still in a correction. It has fallen 15% from its 52-week highs, though has bounced 23% off its December lows.
