Just over a week ago, on February 21, when looking at the crude market, Dennis Gartman siad that "our bet at this point is that the bullish forces prevail, and we say this despite the fact that so much has been made of the rising level of “spec” longs in the market and despite the fact that the rising level of “commercial” shorts has reached new all-time highs. The latter has been reached for the simple reason that inventories of crude above ground and on-board ships are higher than at any time in the past forty years, but those inventories are now hedged with forward futures sales to have locked in the contangos that are now disappearing."
This logic, flawed as it may have been, then led Gartman to the following conclusion:
NEW RECOMMENDATION: Following our discussion above regarding crude oil we wish to buy one unit each of Brent and WTI crude upon receipt of this commentary. We’ll risk no more than 3% from the current prices level and if nearby Brent were to trade above $57/barrel and if nearby WTI were trade above $55/barrel and were to remain there “For an hour or so to prove the merits of the moves” we’ll willingly add to those positions.
Then overnight, following the recent roll, this morning Gartman gave the following update on his long Brent/WTI recommendation:
Long of One Unit Each of Nearby Brent and WTI crude oil: Tuesday, February 21st we bought one unit each of Brent and WTI. April WTI was then $54.08/barrel and April Brent was $56.28 with stops at $52.45 for WTI and $54.60 for Brent. April WTI was rolled into May at a 35 cent cost and Brent was rolled at about the same, putting our price on May WTI at $54.43 and on May Brent at $56.63. They are $54.15 and $56.28 as we write. We shall roll our stops to $52.80 and $54.78 respectively.
Several hours later, WTI tumbled to below $53, and as of this moment is trading at $52.63, which means that Gartman, who correctly called the recent market melt up, has once again reverted to his immensely valuable - and reliable - old self of calling key market inversion points with a several hour/day advance notice.