Time To Short More Oil: Dennis Gartman Went Long

NEW RECOMMENDATION:  Amidst the carnage of the global stock markets this morning and even in light of the sustained bear market in crude oil, the narrowing of the contangos in Brent and WTI brings us to become a buyer of crude as noted at length above. We’ll buy a unit of crude oil, split between Brent and WTI, upon receipt of this commentary. We shall, for the moment, give these prices the latitude to move 3% against us, hoping that we can tighten that up when we return Monday.  The Gartman Letter

Dennis Gartman has been notorious for being a “spunk receptacle” for hedge funds looking to unload a bad position.  His audience is moronic high net worth financial advisors and brain-dead institutional “buy the dip” with other people’s money” pension and investment fund managers.  Perhaps the only better contrarian indicator than Gartman is Jim Cramer.

When Gartman says he has to go long crude because the “term structure” mandates it, it tells me some slippery NYMEX or London trader is whispering sweet nothings in his ear to generate buy interest from the herd referenced above.

I have always maintained that the plunge in the price of oil of is first and foremost a product of the Demand side of the Supply/Demand function.  Events in China and the hard commodities markets (see Glencore’s stock) reinforce and confirm my view.

But to further bolster my “fundamentalist” view, here’s a picture of the supply/demand function per Merrill Lynch:

UntitledTo be sure, oil has fallen quickly and sharply – conditions which could lead to an “oversold” bounce on short-covering from short term scalpers. The fundamentals will ultimately drive the price of oil into the $30’s. I made that call when oil first dropped below $50 in February and I’ve maintained that call since then.

And consider this:  Merrill’s global “economists'” models are factoring in positive economic growth from the large “developed” market economies.  Clearly that outlook is severely brain-damaged…

6 thoughts on “Time To Short More Oil: Dennis Gartman Went Long

  1. We should all be grateful to Dennis Gartman for adressing his market moves in public.
    If I also received the news that he had loaded up massively on AMZN longs this friday would be perfect with Dom Perignon in the glass and lobster on the plate!

  2. DG is such an arrogant ostentatious douche of the first order. Even his writings have to sound pompous. What make him even more obnoxious is he is so consistently wrong, but rarely acknowledges it.

    That being said, the price of oil is set at the margin and the economy has fallen off the cliff. The meth induced energy burst from QE / ZIRP has been spent and run its course. Now comes the nasty withdrawals. As the marginal customers cutback the price of crude will approach the marginal cost of production (i.e. the cost to produce that one add’l barrel). Not sure what that price is, but would wager it is at least $10-15 lower than current market.

    O/T, silver continues to perform very poorly in the face of a strong gold bid. What are your thoughts on this? Even yesterday silver could not even match gold’s performance which is atypical on such an up day.

  3. Dennis Gartman is missing one hell of an opportunity here. He should add another letter named THE GARTMAN CONTRARIAN LETTER and charge big bucks to subscribers advising them to do the opposite of whatever he is advocating on BSCNBC.

  4. Dennis Gartman, the reincarnation of Captain Peter Peachfuzz (I know I’m dating myself a little but the comparison still holds).

    While the plunge in oil has been caused by a declining demand and increased supply, I suspect that a little political behind the scenes action also had a hand in oil’s price action downward. While I can’t prove it one way or the other, what better way for the US to hit back at Russia for its action in Crimea and East Ukraine?
    True, this is just speculation on my part, but with all of the sleazy deals that have come to light so far (LIBOR rigging, London Whale too big to fail or jail, intervention in every market on earth, etc. ) I wouldn’t put it past anyone in government to do anything sleazy, underhanded or crooked.

    Wait a minute, sleazy, slimy, underhanded and crooked IS politics personified!

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