IPath S&P GSCI Crude Oil Total Return (OIL)

After soaring to absurdly high levels just below $150 per barrel, the price of oil has lost approximately 75 percent of his value and settled on support at $35 per barrel. The question is...how much lower can the price of oil go?

Here's the thing. I don't think the price of oil is going to drop below $35 per barrel for the following reasons:

• $35 per barrel was resistance for years and years. Once oil broke up above $35 per barrel in 2004, the $35 price level became a strong support level.

• As the economy begins to rebound, demand for oil is going to increase—especially in China.

• The future value of the U.S. dollar (USD) is going to be damaged by all of the money the U.S. government is pumping into the markets. As the USD goes down, the price of Oil will go up.

I am bullish on all commodities, especially those with everyday uses (oil & agriculture).

My theory is based on inflation rising, primarily because of the trillions of dollars issued for bailouts.

Since oil and most crops are finite resources priced in $USD, it will cost more dollars to buy these commodities.

I own $50 USO July '09 Calls and am also long DXO.

-The Dean