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Quick Take: Oil Could Hit $110 a Barrel

NEW YORK (TheStreet) -- Oil appears to be taking a breather after its run from $90 to $106 per barrel, Tom Reilly, an options trader for SCS Commodities, told TheStreet's Joe Deaux.

Demand has been more of a factor in the rising oil price than events in the Middle East, according to Reilly. Refineries have been buying more oil to increase production of heating oil and gasoline.

As a result, he expects prices at the pump to drop by the end of summer although there may be a bit of an increase before then.

The Midwest, which has gasoline prices near $4.50 per gallon, has been much higher than areas such as the East Coast, which is around $3.50 per gallon, mainly due to problems with regional refineries. While neither is cheap, above $4 is where it really starts to pinch consumers, Reilly said.

Pinning oil near $105 could be the very high open interest in the expiring August contracts, according to Reilly. However, after expiration, crude could build a base around $105 before making a push higher. Volatility will likely remain low, assuming there isn't drastic news out of the Middle East.

Crude could gradually run to $100 over the next three weeks before pulling back into September, he concluded.

-- Written by Bret Kenwell in Petoskey, Mich.