Crude to 'go the way of whale oil': Dennis Gartman

Crude oil is going the way of the fossils that comprise it, commodities trader Dennis Gartman said Monday.

On CNBC's "Fast Money," the editor and publisher of the widely followed Gartman Letter cited a statement from Lockheed Martin that it was working on a compact fusion reactor that could be ready within 10 years.

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"Fusion is going to be the great nuclear power of the next 150 years. And finally, we are driving less and less. We are using so much less gasoline than we ever have, in global terms, in national terms, in per capital terms," he said. "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."

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Dennis Gartman
Adam Jeffery | CNBC
Dennis Gartman

How low?

Gartman wrote that if fusion does become a reality, "oil's true price has become $10/barrel … or less."

Crude oil could go extinct, he added.

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"I think crude oil goes demonstrably lower over the course of 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 pointed to the term structure of crude, noting that Brent crude is in contango—when futures prices are greater than the spot price—and that backwardation—the futures prices drop below the spot price—in West Texas intermediate crude pricing "has collapsed."

"It's heading to a contango, which tells you that crude is bidding for storage," he said. "There's more than enough crude out there right now to meet any kind of demand. More is coming."

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Gartman added what was more important to him was the fact the Strategic Petroleum Reserve, which is supposed to hold 90 days' worth last year's net imports of crude, was holding a 245-day supply of oil.

A selloff of some of that supply, he also said, would "take $15 off of crude oil in a very short span of time."

CNBC's Michael Newberg contributed reporting to this article.