Although it may seem like oil is oversold, Dennis Gartman says now is not the time to buy.
That’s tough to hear for energy bulls, especially after oil suffered its worst 3-day rout since August
But Gartman, author of The Gartman Letter and a CNBC Contributor, says oil is facing a bouillabaisse of negatives.
First and foremost, Gartman cites increased signs that the global economy is slowing. "You've got weakness in Europe, and now a poor jobs report," he says.
Also he reminds the desk that the US dollar is stronger, a bearish development for commodities broadly.
In addition, Gartman thinks supply is plentiful. "There's a whole lot of drilling going on," he says.
Beyond that, Gartman thinks the confusion and drama surrounding Chesapeake will send investors to the sidelines.
And -- as if all that wasn't bearish enough, Gartman also thinks a plan to raise margin requirements will also weigh on prices.
Although CME Group was granted a 90 day reprieve from imposing the new rules – they now are scheduled to go into effect on August 5th - higher trading costs are coming, he says.
“It’s going to be a problem for the next several months,” he says. “When you make it more difficult for the membership to trade – it creates an unwillingness to take positions. There will be a less of a propensity on the part of hedge funds to buy,” he says.
Add up all the catalysts mentioned above and Gartman says, "There's a great bouillabaisse of bearish catalysts all coming together. There's going to be selling pressure."
What do you think? We want to know!
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Trader disclosure: On May 4, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long MS CALLS; Pete Najarian is long INTC; Pete Najarian is long INTC CALLS; Pete Najarian is long YHOO; Pete Najarian is long SBUX; Pete Najarian is long SBUX CALLS; Pete Najarian is long PEP; Anthony Scaramucci is long AAPL; Anthony Scaramucci is long BAC; Anthony Scaramucci is long GS; Anthony Scaramucci is long IBM; Anthony Scaramucci is long PEP: Steven Grasso is long ASTM; Steven Grasso is long AVAV; Steven Grasso is long BA; Steven Grasso is long D; Steven Grasso is long FRO; Steven Grasso is long LNG; Steven Grasso is long MHY; Steven Grasso is long NUAN; Steven Grasso is long MO; Steven Grasso is long PFE; Steven Grasso is long PRST; Steven Grasso is long S; Steven Grasso is long XLU; Steven Grasso is long ZAZA
For Patty Edwards
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For Dennis Gartman
Nothing to disclose
Mark Mahaney
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