For weeks I’ve been discussing what price Oil was headed to in the short term. I use USO as the proxy, and today that level was hit. Following the hit, oil reversed and finished strong on the day.
How did I know this would happen?
Simple. If you follow the pundits on Tout TV (CNBC), then yesterday you might have seen the world famous Dennis Gartman from the world famous Gartman Letter.
He gave a pretty definitive outlook on oil that it was going lower because of some made up reason about contengo and backwardation. These are real terms when discussing futures contracts, and how the front month is mis-priced to the later months, yada yada yada….
Last week the reason oil was going lower was because there were a couple of oil tankers with stolen oil from the terror group in Iraq floating around looking for a buyer.
These things are certainly not going to drive the price of oil lower.
Nevertheless, nobody bothers to challenge his analysis, they just nod their heads and assume he’s right.
He’s almost as good of a contrarian indicator as my mother in law.
Oil hit the number, and reversed back up. Who would you rather listen to, a guy who comes on TV to talk his book or an analyst giving you the number weeks in advance.
More on this and the rest of the markets in tonight’s video: