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Dennis Gartman: Libya Oil Won't Be Online for 18 Months

The Oil Trade

Oil landed on the radar Monday with investors wondering what happens to oil prices if and when Muammar Gaddafi is toppled as the leader of Libya.

It appears Libya's six-month civil war is drawing to an end, with rebels sweeping into the streets of the capital Tripoli in celebration.

How should you play it?

According to Dennis Gartman don't bet that Libya supplies are coming back online anytime soon. He doesn't think Libya will get back to full production for at least 18 months.

“When you have a war such as we’ve had there, the amount of damage to infrastructure to pipelines and to machinery is substantial. Also, there was a tremendous loss of manpower. It takes time to replace that."

Trader Joe Terranova shares that opinion. He reminds the desk that in January, Libya was generating 1.6 million barrels per day and by May the nation was only generating 60,000 barrels. "The ability to bring that back will be difficult."

If you're looking for trading ideas, Gartman thinks the trade is probably long as the market comes to realize they've put the proverbial cart before the horse. "At $84, I would not be short WTI. That would be an ill-advised trade."

And if you're planning to play the a bounce, Gartman adds, "play it long Brent because Brent should continue to command a premium to WTI."

The Gold Trade

Also gold was a hot topic on the floor with the precious metal trading above $1900 an ounce on Monday.

Buyers put money to work in gold as a bet that the sputtering global economy would generate further monetary easing, in turn raising gold's appeal as a hedge against inflation.

Although long-term gold may continue its march higher, if you're a trader, Gartman tells us that currently gold is getting very 'sporty' or overpriced. In the short-term he says, "I think it’s wise to be less long of gold."

What do you think? We want to know!

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Trader disclosure: On Aug 22, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymours own (BAC); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman’s firm owns (HPQ) puts and Finerman owns (HPQ); Finerman owns (JPM) and Finerman’s firm owns (JPM) stock and (JPM) leaps; Finerman's Firm Is Short (IWR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (XRT); Finerman's Firm Is Short (SPY); Finerman's Firm Is Long S&P 500 Puts; Finerman's Firm Is Long Russell 2000 Puts; Terranova owns (XOM); Terranova owns (IBM); Terranova owns (VRTS); Terranova owns (AAPL); Nations is long (SPY); Nations is long (TLT)

For Brian Kelly
Accounts managed by Brian Kelly Capital own the Euro
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Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC

For Dennis Gartman
Funds Managed By Dennis Gartman Own the British Pound, Euro, Yen, & Swiss Franc
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Scaramucci Is One Of 8 National Finance Chairs For Mitt Romney Campaign
Scaramucci held a fundraiser for Mitt Romney

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