Investment guru Dennis Gartman, editor of the Gartman Letter, says crude oil’s plummet is for real, and that its price could drop as low as $82 per barrel.
Crude hit a record high of $147.27 on July 11. Since then it has plunged 40 percent to $88.85. Gartman told Bloomberg TV that the decline will likely stop at $85 to $87.
“But markets always overshoot, so of course it can get to $82,” he says.
Gartman points out that OPEC’s president Chakib Khelil said he wants to see crude at $85. “OPEC will probably cut production a little at their next meeting,” on Nov. 18, Gartman says.
“But when it comes to OPEC, you always have to be careful when they say they will cut production, because they rarely do.”
As for the factors forcing crude prices down, there are several, Gartman explains. Global recession is the No. 1 reason.
“There is concern this won’t just be a domestic recession, but an international one,” he says.
“And it won’t be a modest recession. This one has the looks of something manifestly more serious than that.”
That outlook alone would be enough to push oil prices down, Gartman says.
“Add to that a lessening of problems in Nigeria. And clearly demand is waning here in the U.S.”
That’s driven hedge funds and mutual funds to want out, he says.
Some experts are even more bearish than Gartman.
Tom Bentz, senior energy analyst for BNP Paribas, told Bloomberg, “If we are able to break through [$86], prices are going to fall to the lower $80s and maybe the high $70s.”
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