Dennis Gartman: $100 Oil Not What You Think

On Wednesday chatter on the floor was all about crude and how the recent price action could impact the market.

However, Dennis Gartman tells us that if you’re focused on the price of US crude breaking above $100 – you’re focused on the wrong thing.

The strategic investor and famed commodities trader says what matters is the average price of crude – that is US Crude orWTI and Brent averaged together – and that average price has been moving lower.

Gartman tells us is the price of WTI is higher on Wednesday only because Enbridge turned around a pipeline, which will enable it to transport oil from the landlocked oil storage hub of Cushing, Okla., to the U.S. Gulf Coast.

That makes the oil available for export and viable for Europe, Gartman says.

However on the news the price of Brent is down considerably, and that's the big takeaway. Another way of saying it is – the spreads are coming in. And that's bearish for some refiners including Valero , "which have effectively been able to sell their WTI products at Brent prices," Gartman explains.

Equally important is what not to make of the gains – or to think mistakenly that the move above $100 is a sign that crude is breaking out. "It's not," says Gartman.

"It's just the knee-jerk reaction to the Enbrige news," mentioned above.

Trader Steve Cortes feels much the same. And to confirm his thesis he says, “Look at the action in aluminum. Typically aluminum trades in tandem with oil - both tethered to industrial demand - but aluminum is near its lows for the year and crude is absolutely taking off.”

Gartman agrees with the trading thesis but not the trade. “If you’re going short – why not short Brent.”

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CNBC.com with wires.