Crude Opportunity Welcome to Trade Ideas. I'm Brian Price here with Mark Newton, founder of Newton Advisors. Mark, thanks so much for joining us today on Real Vision. My pleasure. Thanks for having me Brian. So what are we looking at today? Well, I like energy quite a bit here and in particular, crude oil. The move that we've seen in recent weeks, breaking out above this longer term based consolidation. It really makes me think that energy is going to continue to move higher in the weeks and the months potentially ahead. Walk me through the movement within the charts that you've seen in the last couple of months that have you bullish going forward? So specifically, Brian, you're looking at a formation that really began back in the early part of May when Crude started to base out a little bit. We moved sideways for the last few months, and WTI getting over $71 makes us very bullish from a short-term point of view. So my thinking is it's right to buy crude even here above 72, and think that we likely can get up to at least 75, 76 in the short run making both WTI and Brent Crude attractive. I should say that Brent Crude actually is moving up at a bit quicker rate. We've seen that spread really start to diverge. What's happening with Iran, the threat of what's happening there, going into full swing in November, that should continue to be problematic I think for inventory, that's going to be taken off in a bit quicker rate then we will see demand start to wane. So really a lot of this continues to be about supply and demand. It's not really tariffs. It's about really punishing Iran and what could happen potentially to inventory being taken off the market, which I think will be much more of a supply issue near term and really bullish for the price of energy specifically for Brent and for WTI Crude. Given the relationship between Iran and Saudi Arabia, if Iran has to take pumps offline due to sanctions or at least the output can't taken to market, do you anticipate that Saudi Arabia would then pick up their outflows to compensate for the lack in the market or do you think they'll adhere to restrictions within OPEC? Well, being that I'm not from a fundamental nature, it's always difficult to know what they're thinking. I think at some point that would be the case. However, the fact that the administration has come out and really publicly said that he expects them to do that, means that they might try to hold off and not do it as quickly just to try to show people who's boss. My thinking basically, it's going to be very difficult for any country to dictate what OPEC does with their production. Particularly, when it's coming from the US administration, I think really eventually they'll start to see to it. A lot of it depends on the degree of the sanctions. They're supposed to be a 100 percent on Iran by November from what the word is. So we've already seen evidence of the price of crude starting to accelerate given what could be capacity taken off. Right now, that appears to be a much bigger deal than any sort of drop in demand. It continues to be a real supply-demand issue and that's how I view it not necessarily with regards to tariffs or China, but more just sanctions with Iran and what's happening with OPEC production. It looks to me like supply is starting to pull back a little bit. Is viewed as a very bullish technical issue that it could cause price to really accelerate more in the near term. So with the focus on what could happen following sanctions, are there any other major producers worldwide that you keep an eye on? I understand that your focus is from the technical side of things but they do interconnect off. Are there any other countries that you have some caution over as far as what their impact could be? Well, I think the world continues to look at Venezuela and what's happening there and that's obviously a difficult situation. It's tough to know how that will be resolved. It really it's all about Saudi Arabia though and really and Iran right now. At least the market seems to be solely focused on that. So that's really as I look at the charts, technically, you're seeing very bullish signals that tend to line up with what fundamentally they're thinking can happen as well with a little bit of supply disruption. So when you have a technical and a fundamental case both line up as being bullish, despite the fact that this part of the year historically has been a very bearish seasonally, for crude, we see crude typically underperform and start to pull back during this time a year. Obviously, this takes precedence and equities in the economy have been still very resilient and no real evidence of demand waning. So its right to still look at a technical breakout of energies being one of the better places right now to invest. Specifically, for investors to invest in either WTI Crude or Brent Crude through futures or look at ETFs like the USO for example. So Mark, you mentioned the USO, and when we talk oil, my instinct is to say all right. Well, that's an ETF that provides you great exposure. But given the rollover of the prices when it comes to USO, that's a name you like to stay away from. Walk me through some of the potential pitfalls for a long-term investor and why you might want to look towards the futures market for this play. I agree a 100 percent and that any sort of ETF that's tied to futures like that where you tend to see a role in futures depending on whether the futures and backwardation can make life difficult to buy and hold, I would not recommend somebody to invest in Dubai and hold unless you're going to be very short-term in nature. So it's not a long-term instrument. It's more of something that you try to catch the wave for a very short period of time. Futures has its own risks. It's a pure play on how to invest in crude oil. So for some people, that could be a preference to them. So with that in mind, walk me through the key levels that you're looking at when it comes to crude right now and the anticipation and the timeline for the trade. So crude oil just got above 72 as of the last couple days. It's still attractive. There are very little signs of any exhaustion. We've literally just seeing a breakout from a four month consolidation patterns. So my feeling is that crude should get up to $75-76 really the next one or two months. So I think that we can see a big move in crude over the next few weeks at a time when really ahead of the sanctions on Iran. So the time between now and November is likely a time when crude can make that run up. Then after we see more details, then potentially we settle off and demand starts to wane. If there's any sort of a market pull back in October and there is fears about demand on the decline, then that would make me think that we probably stall out and start to turn down. But the near term it's right to be bullish. So you buy WTI here or Brent Crude. Brent Crude is a little bit over $81. So crude is about 72. So I think that crude from here gets from 72 to 75, 76 still a decent move higher. On the downside, I think any snapback that gets back down under 71 would give me a fair degree of caution that we're starting to reverse and that this breakout might be false. I don't think that's the case as of now. The technicals and the fundamental seem to be lining up towards higher prices. That the indicators that I used to show exhaustion, really have not flagged any sort of warning signal that crude could roll over. So for those that do have a tolerance to risk and understand what affects the role can do to investing in ETFs, the USO could be bought for a very short term trade for three to five weeks. Really that's the maximum that I would advise ever putting money into an ETF like that. It has to be done as a commodity, is really starting to accelerate something where you're dealing with futures roles because it will underperform pretty dramatically. The futures might be a preferable way to go about being long. Well, Mark we'll keep an eye on these futures contracts over the next month or two. We'll see what happens with Iran. As always, we look forward to having you on for these trade ideas and your fantastic technical analysis. Thanks Brian. Mark Newton, thank you so much for joining us. My pleasure. So Mark is bullish on oil. Specifically, he suggests buying WTI crude oil futures at $72. His stop-loss is 71 with a target price of 76 over the next two months. For Real Visions Trade Ideas. I'm Brian Price. Thanks so much for watching.