For those betting on future rallies in crude, veteran commodities watcher Dennis Gartman has a stern warning: Don't get your hopes up.

Although oil has clawed back to near $40 after a deep sell-off, crude is still off more than 30 percent year-to-date. With so much lost ground to cover, that makes investors like Gartman believe the worst isn't over just yet, especially with U.S. production being crimped by oil's slide.

"There is a lot of crude oil that has been capped and, on the rally, those caps are coming off that production," the publisher of the Gartman Letter told CNBC's "Futures Now" in an interview last week. "There's a lot of overhead that has to be accommodated. That tends...toward lower prices."

Gartman further explained that hedges have to come back into effect if and when the caps come off. Currently, he estimates that there are 300-400 wells across the U.S. that have capped production under current prices.

"It's still a bear market in crude oil: each low is lower [and] each high is lower," added Gartman, who believes that crude supplies are now abundant. "The contango [and] the carrying charges have begun widening out again," Gartman said. Contango is the difference between crude oil contracted to be delivered in the near term, and oil to be delivered further in the future.

In terms of U.S. crude, Gartman sees the near-term high-range spot at $42 per barrel. At this range, he feels that consumers will be happy as gas would remain at $2 per gallon heading into the summer. In the long-term, he feels crude will trade at a maximum price of $47. "Those are reasonably good profitable levels" for producer, he noted.

In this range, Gartman believes drillers and producers can sustain profitability, because technology has enabled them to make more informed decisions thanks to seismic imaging, where sound waves are bounced off of rock to reveal the presence of oil.

"Drillers know where the oil is and don't have to drill 15 times before they hit oil. 15 years ago it was a 50/50 percent shot," explained Gartman. "Today, drilling and hitting oil each time is a sure thing. And, with the advent of horizontal drilling, they can maneuver underground like never before."

This alleviates the pressure, to some extent, on drillers to see prices reach levels in the $50 range.

Gartman also noted another factor working against the rising price of oil: Fracking. While the practice is still prohibited in key parts of the U.S. because of environmental concerns, other oil-rich nations may turn to this method in a more meaningful way, he said.

"Just because fracking is limited in the U.S. doesn't mean other countries can't employ this technology. Africa and South America can easily hire American frackers to extract oil," said Gartman who believes this will translate to more supply that will check crude's advance in the long run.

Finally, Gartman was dismissive of the potential benefits that could come from an April OPEC emergency meeting and remained doubtful a freeze among members would make for higher prices.

"I was surprised that the market got that exercise on the upside predicated upon the idea of a meeting of some sort," he said. "I think it was astonishingly comical that everybody got that excited."