Gartman is the editor and publisher of The Gartman Letter, a daily commentary on the global capital markets, and regularly appears on CNBC, ROB-TV and Bloomberg television to discuss financial matters. Yesterday, Gartman said that a supply glut and a market that is in contango is pushing crude oil down the path of obsolescence, comparing petroleum to whale oil at the turn of the twentieth century.
“I think crude oil goes demonstrably lower over the course of the next several years,” he said. “It goes the way of whale oil at the turn of the 20th century when crude oil came on line. Energies tend to be replaced, one, by a different type, and the old energy loses its value completely. Crude oil is going to go a lot lower. Who cares whether it goes to $50, $40. That’s not what’s important. The trend is clearly downward. Oil prices are going to go a lot farther down.”
Gartman went so far as to predict crude would hit $10 per barrel, though he has since retracted from that statement.
Gartman did not speak about renewables challenging petroleum’s supremacy, referring instead to Lockheed Martin’s proposed fusion reactor as the usurping technology.
“Fusion is going to be the great nuclear power of the next 150 years,” he said.
Finally, oil is also on its way down because Americans are simply using less of it. “We are driving less and less,” said Gartman. “We are using so much less gasoline than we ever have, in global terms, in national terms, in per capital terms. All of those things, I think, are going to be weighing heavily on crude oil. And where could it go? A lot lower, a lot lower.”
For the first time since June 2012, oil prices have come down to $80 per barrel, following a WTI crude oil forecast of $75/bbl in 2H15 by analysts at Goldman Sachs.