Why Dennis Gartman Says Oil Will Go 'Demonstrably Lower'

Over the past few months, Dennis Gartman has had the same answer for where he sees oil prices going: demonstrably lower.

He says he will continue to say “demonstrably lower,” but he doesn’t know how far that means.

“All I can tell you is that it’s moving from the upper left to the lower right,” he said.

Gartman is the editor and publisher of “The Gartman Letter,” and he recently joined Benzinga’s #PreMarket Prep to talk about why he expects oil prices to continue their plummet.

“The trend is down, and we will be surprised by how far down prices can go,” he said.

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Those Who Do Not Learn From History

He explained that historically, in the 1860s, crude oil traded at $3.85 a barrel when it fell to $0.10 -- a 90 percent decline.

At the turn of the twentieth century, Gartman went on, crude oil fell from $13 a barrel to a dime.

And a mere 10 years ago, Gartman said prices dropped from $125 to $10 per barrel.

“Crude oil has this strange capability, when it really gets going, to fall 90 percent in price,” he said.

A Look Into The Future(s)

What Gartman does know is that oil prices will keep falling until the futures market begins to show some internal change.

“That internal change will be, instead of watching the front months lose consistently ahead of the back months -- that is, on the down days, the front months are down more than are the deferreds. And on the up days, they are up less than the deferreds,” he said.

Until that time, he has one resolute comment: prices are heading lower.

The United States Oil Fund LP (ETF) (NYSE: USO) recently traded at $21.47, while the iPath S&P GSCI Crude Oil Total Return (NYSE: OIL) is trading at $13.42, both up 4 percent on Friday.

Gartman also talked about Russia, the Federal Reserve and commodity prices.

Check out his full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.