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Dennis Gartman: Crude oil heading to $85

Crude oil looks weak and could be headed toward a level of about $85 a barrel, commodities trader Dennis Gartman said Monday.

"We've already seen how much $120 crude oil there is out there. We know what it costs us to produce this crude oil," he said. "I have a sneaking suspicion we're going to go down and take a look and see how much $85 crude oil there is out there."

West Texas Intermediate crude traded below $100 a barrel for the first time since July on Monday, Reuters reported.

On CNBC's "Fast Money," the editor and publisher of The Gartman Letter cited geopolitics and a U.S. energy-production boom for the downward price pressure.

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"The Saudis, I think, have a very marked propensity to increase production of crude oil, which would benefit the United States, hurt Russia and seriously hurt Iran when Iran comes out of its sanctions," Gartman said.

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"So, I think there's a lot going on, not just here in the States but politically. I think crude oil looks weak, and the term structure, the front months have been leading the market on the downside for the past several weeks.

"We actually have a contango again—that's important," he said. (A contango occurs when the futures price of a commodity is higher than the expected future spot price.)

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Investors need to look downstream, Gartman said.

"I think we should focus on the products," he said. "The refiners are making a lot of money right now, especially given the discount that WTI has to Brent, especially given the discount Canadian crude has to WTI and to Brent. The refiners are making a lot of money. They can export product. We should be watching what's going on in the product market."

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

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