Market watchers scrutinizing fluctuations in volatile crude oil prices shouldn’t expect upward moves to last, publisher Dennis Gartman said Thursday.
No meaningful reversal will occur so long as storage facilities continue to fill up and OPEC refuses to lower its production ceiling in order to support prices, he said.
“As long as crude is bidding for storage, as long as there’s an abundance of crude — and there is an abundance of crude — as long as the Saudis continue to say we’re going to defend our market share, any bounces that you get will be short term,” The Gartman Letter editor and publisher told CNBC’s “Squawk Box.”
To support his thesis, Gartman pointed to the widening gap between the near-term price of oil, or the spot price, and the cost of contracts for future crude deliveries. The price of oil one year from now is nearly $9 higher than spot prices, setting up a situation known as contango