At the end of a week in which there seems to be very little cause for optimism among crude oil bulls, Dennis Gartman decided it’s finally time to go long oil. WTI crude oil prices hit six-and-a-half-year lows and shares of the United States Oil Fund LP (ETF) USO 1.05% hit all-time lows this week following news of a surprise build-up in U.S. inventory levels and weak Chinese manufacturing numbers.
However, Gartman explained why he now believes that there are good things on the way in the oil market.
Watching The Front Month Spread
In his Friday letter, Gartman was very clear about his shifting mindset. “Crude oil prices are lower but we are changing our view on prices for having been overtly and rather relentlessly . . . and very publicly . . . bearish, we are this morning turning bullish of crude oil and we are turning so because the term structure shifts mandate that we do so,” he declared.
Gartman is basing his shift in outlook on the narrowing front month contangos of both Brent and WTI as prices have fallen, which he interprets as a sign of coming strength in oil prices. “We do not make this statement lightly for this is a material shift in our view of the energy market . . . a very material shift,” he added.
Following ‘Informed’ Money
While crude oil prices during the past week have fallen by $2.70/bbl, Gartman was…
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