Closely followed market watcher Dennis Gartman says billionaire Boone Pickens' prediction that the bottom is in for oil is off base.
"It's a supply circumstance. You can see it in the term structure of the futures market on Friday, when you had a strong rally, the back months led the way up," Gartman told CNBC's "Fast Money" traders on Monday. "That's not how bull markets function, that's how bear markets function, and I think Mr. Pickens, a hero of mine, is wrong."
Pickens, who built Mesa Petroleum into a powerhouse and founded BP Capital Management, told CNBC's "Squawk Box" on Monday that oil would be trading at $52 by year's end.
"Once you hit bottom which I think was $26.15 on WTI, you're going to double within 12 months by historical information," Pickens said. "So here you are at $30 and I think you'll be at $52 by the end of the year."
On Tuesday, West Texas Intermediate crude fell to around $30 a barrel. Oil is now down nearly 20 percent this year.
The hole in Pickens' argument, according to Gartman, is the assumption that crude oil producers are ready to cut production. Russia, Iran, Saudi Arabia and Venezuela, to name a few, are still pumping at record levels, but for different reasons.
"You hear talk about the Russians wanting to reduce supply. They can't possibly because a good three-quarters of where they produce their oil is in very cold areas in Siberia. They don't have those pipes insulated, they have to continue to pump crude oil through there," Gartman said. "The Iranians and the Saudis hate each other. They have, for lack of a better term, a war going on — a gas price war. They're not going to let go."
The most important incentive to many of these countries is free cash flow, Gartman said.
"When you need cash flow, you produce and you don't really care where the end price is. You keep producing it."
In the longer term, Gartman sees oil in a $27-$47 range with many of the volatile swings behind it.
"The bear market has not ended in oil," said Gartman. "If we start to go sideways for four, five months, companies will become profitable again at these levels."