After falling 6 percent Monday, crude is back above $30 a barrel. And according to one widely followed investor, the commodity may be finding a floor.
“At this point I don’t think I want to be short of crude oil. I’ve been very bearish for a long time. I think the time for being bearish of crude is over,” Dennis Gartman, editor of the Gartman Letter, told CNBC’s “Fast Money” traders on Monday. “I think that there’s a possibility we have bottomed.”
Crude has gone on a wild ride in recent trading sessions. On Friday, the commodity traded up 9 percent to $32.19 before falling again Monday.
Friday’s strong but short-lived rally is the reason why Gartman believes crude may have bottomed. He says that in most crude rallies, the crude contango — when the futures price is higher than the spot price — is supposed to narrow. In the current situation, the contango widened — while short-term crude prices rallied, contracts further out rose even more.
Gartman says that the volatility in crude is a product of a bear market that hasn’t fully run its course. Eventually, he said, he imagines crude stabilizing around $37 a barrel.
“I have my doubts about crude falling below $22 a barrel — if it happens in sheer panic it will be over in a sheer second,” Gartman said. “We’re not going to see crude above $44 again in my lifetime.”
As for stocks, Gartman dismisses the idea that oil and stocks will continue to trade together, as they have been, and he remains bearish on the market in 2016.
“It’s very possible in the next six months that the S&P 500 could touch 1,750 with very little difficulty,” Gartman said.(It was trading at 1,897 on Tuesday.) “Rallies are to be sold.”