Market selloff 'overdone across the board,' Prosper Trading Academy CEO says

Scott Bauer, the CEO of Prosper Trading Academy, joins Yahoo Finance Live to discuss how gas prices and crude oil stock values could be affected by looming policies and the latest COVID-19 variant.

Video transcript

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AKIKO FUJITA: Welcome back to Yahoo Finance Live. We are seeing WTI crude here down about 11.5% now. Seeing its biggest one-day drop since April 2020. The oil patch overall seeing a big sell-off today. The energy sector we should point out, down more than 4%. Let's bring in Scott Bauer, Prosper Trading Academy CEO. Scott, talk to me about what you're seeing from these moves, how much of this do you think is overdone?

SCOTT BAUER: I think there's a lot overdone. You know, whether you're looking at commodities, equities, interest rates, I think there's a lot overdone. And it's being exacerbated because of a holiday today. You know, yes, the market's open half a day. But volumes are really light and this is typically a day regardless of the type of news, that you see wider markets and maybe bigger moves because of lack of volume. So I think that's really helping these big moves today. And I do think it's overdone. I think it's overdone across the board here.

But the bottom line is what this tells you in the commodity and in the crude space here is that these rising prices that we've seen over the last few months to you know, from crude to the gas pump, this is really all focused on supply and demand, right? Because what we're seeing today is all of a sudden, oh no, there could be a shock to the system for demand, not supply but demand. If this new strain-- and let's pray to God that it doesn't materialize-- but if this new strain hits and maybe starts to have some lockdowns again, demand is going to be hit. So everything that we have seen, to me, it's not a matter of policy, it's not a policy of the old administration, the new administration, this is the basic fundamental principle of economics, supply and demand.

KARINA MITCHELL: Scott, it seemed to me President Biden got what he wanted just not quite in the way he expected to get it. But I want to know how does OPEC Plus respond to this? They're set to meet next week, all eyes were on this coordinated effort to draw from strategic reserves. And you know, there was some question about possibly them sort of dropping the amount of output that they release to sort of keep supply and demand in check. What do you think happens next week?

SCOTT BAUER: So it really appeared after you know, we went to the strategic petroleum reserves, along with many other countries, it really seemed like OPEC and OPEC Plus kind of wanted to stick it to the rest of the world, meaning that they were not only not going to increase supply but maybe they were going to pull it back a little bit, they were really unhappy. This news to me maybe shifts them into the camp of OK, we're just not going to release any more supply but we're not going to pull it back. Anything can obviously happen here but I think that's the camp that I would be in is that this news you know, puts them in, all right, we're not going to be so upset with what these other countries have done but we're also not going to increase our supply.

AKIKO FUJITA: Scott, you said, you've been spending the last several hours trying to find the bottom here. When you look at the overall market rout, I'm looking at WTI right now, $69 a barrel, Brent at 74. What's the range you see this trade in when you consider the uncertainty coming from this, but also to Karina's point, these questions around OPEC Plus and how much they turn on the tap?

SCOTT BAUER: You know, I think 65 is an area that we should all be watching. Technically that should be really big support because that had been the level from about April of 2019 to January of 2020 that had been major resistance for crude. And then once it broke through there basically in March of this year, that has now become support. So I think we could start trickling down there. I don't think we're going to get that low but that is absolutely an area that I would keep my eye on. And then back to where we were pretty much before this huge sell-off today, maybe in the 74 to 75 area, I think that's going to be resistance. This is going to be our new trading range in my opinion, for the next probably couple months unless again, we get some either geopolitical news or maybe something further about COVID here, that should be the new trading range.

KARINA MITCHELL: All right. Scott Bauer, Prosper Trading Academy CEO. Thank you so much for your time on this Black Friday. Wishing you a happy weekend.