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Gartman Covers Oil Short

Two days ago, when oil was plumbing its latest cycle lows, Goldman came out with a "contrarian" note in which it admitted that its bullish commodity outlook had been wrong, and cautioned that absent "shock and awe" from OPEC, oil could drop below $40, to which our logical counter was that this likely capped the latest crude selloff, but there was one outstanding item: the world-renowned momentum chaser, Dennis Gartman: "As to whether this means that the "suddenly" skeptical Goldman, which as we sarcastically pointed out was selling oil throughout its entire "bullish phase", is now finally buying WTI, consider that Gartman remains bearish and do the math."

Fast forward 48 hours when after the latest rebound in oil, Gartman is no longer bearish...

ENERGY PRICES HAVE FALLEN FROM THEIR BEST LEVELS and have done so despite the very bullish numbers on inventories of crude and products reported out yesterday by the EIA. However, firstly we have to report that crude oil production in Venezuela continues to dwindle as OPEC reported yesterday that production there has fallen to 1.93 million bpd. This has happened despite the fact that all of the other members of OPEC, in aggregate, produced more crude oil in June than they had in May.

... and has covered his short:

... what concerns us is that even with prices lower than where we marked them yesterday, the contangos for Brent and WTI have both narrowed and this is the 2nd day in a row that the averaged front month contango has narrowed. This we take seriously, and we take it all the more seriously in that at $2.33/barrel the contango has narrowed for the week, for it was $2.61/barrel one week ago this morning. For that reason, we are going to move to the sidelines in crude oil, covering our short position upon receipt of this commentary and standing aside. In retrospect, we should have covered last week amidst what was then panic liquidation, but we follow our rules regarding the changing nature of the contango and shall make the change today.

This may or may not explain the oil spike this morning despite the bearish IEA report released overnight, which found that OPEC compliance with the Vienna production cuts has plunged to 78%, down from 95% in May and the lowest rate this year.