Energy expert John Kilduff sees an unusual phenomenon affecting crude oil and beaten-down stocks.
According to the Again Capital founding partner, oil and stocks have embarked on the closest trading relationship since early 2016 and during the financial crisis sell-off. "This has been the highest correlation that I've seen in quite some time," he said Tuesday.
His latest thoughts came with U.S. benchmark West Texas Intermediate crude on track for its worst month in more than two years. WTI closed at $66.40 a barrel on Tuesday, while Brent crude settled at $76.23.
"A lot of folks like to trade crude oil and other commodities to get away from the correlations you have in the stock market," said Kilduff, a CNBC contributor. "But over the past 20 days, you can see where stocks peak out in early October. Crude oil peaked out in early October."
However, Kilduff isn't implying the trend spells more downside ahead. There's a bullish factor hanging over the oil market: Iran.
On Sunday, sanctions against Iran exports are scheduled to go back into effect. And, it's unclear how they'll impact oil prices.
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