The recent rebound in oil
should not be seen as a sign that the price has reached a bottom,
influential investor Dennis Gartman told CNBC Tuesday, warning that $20
per barrel was "still possible."
"I actually doubt that we have (hit a bottom) what we've seen in the
past week and a half or two weeks is a substantive rally from the lows
but what is depressive to me is the fact that the carrying charge has
not done what one would want to see the carrying charge do in a rally,"
Gartman, the author of the "Gartman Letter" told
CNBC's "Worldwide Exchange" Tuesday.
"We've seen the market continue to have a large contango (where people
are willing to pay more for a commodity at some point in the future
than the actual expected price of the commodity) and crude continues to
bid for storage," Gartman said.
"In that environment it's very hard to think that this is anything
more than a much-needed technical bounce and any further $1 or $2 rally
in crude oil probably should be sold. I think the lows have not yet been
seen and maybe $20 a barrel is still possible."
Gartman's comments come after Citigroup published a report on Monday
stating that oil prices - which have fallen 50 percent from around $114
per barrel last June to currently trade around $57 -
could fall as low as $20 per barrel .
"It's impossible to call a bottom point, which could, as a result of
oversupply and the economics of storage, fall well below $40 a barrel
for WTI, perhaps as low as the $20 range for a while," Citi's head of
global commodities research Edward Morse said in the report Monday. "The
recent rally in crude prices looks more like a head-fake than a
sustainable turning point."
The comments come amid a number of reports that signal a slow recovery
in oil markets. On Tuesday, the International Energy Agency said that
while the rebound in prices of late showed there was "light at the end
of the tunnel,"
it "could take years" for the market to rebalance .
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