OPEC is a cheating cartel: Dennis Gartman

$40 oil is coming: Dennis Gartman

When it comes to the word of OPEC, Dennis Gartman is urging investors to question everything coming out of the cartel.

"If I've learned anything in 40 years, it's that OPEC cheats. Every one of the members cheat. They cheat on themselves. They cheat on each other. It is extraordinary. To think otherwise is naive," the so-called commodities king said Tuesday on CNBC's "Futures Now" when discussing expectations that OPEC will not arrive at a deal for a production freeze.

For context, the cartel indicated in September that the framework for a deal had been agreed upon. Then OPEC member Saudi Arabia issued $17.5 billion worth of bonds in October.

The editor and publisher of "The Gartman Letter doubled-down on his bearish thesis calling for oil to head lower from current levels. Now, when seeking an honest indicator in the global market, Gartman recommended looking outside of OPEC toward Russia.

"The only fellow speaking the truth about crude oil was [Igor] Sechin," explained Gartman. Sechin, CEO of Rosneft, an oil company majority owned by the Russian government, recently expressed a desire to increase production. "When everybody else was saying that they were going to curtail production, Sechin said, 'Why should I?'"

Gartman noted that, despite OPEC's tough talk, the cartel's hand was forced when Rosneft indicated intent to produce heavily, not scale back. Russia's conviction, coupled with cartel discord has Gartman looking toward a potential breakdown for crude heading into winter.

"You probably have to take WTI down now to $40," warned Gartman. "You need to take it down there to stop ... production facilities here and to stop people from bringing on old wells that had been drilled and capped. At $40, they'll probably stay capped."

This notion comes alongside a note from Goldman Sachs wherein the bank agrees that further infighting among OPEC members could drive the price of oil to $40 per barrel.

"I think we take crude down into the low 40s, which is a break in trend lines as the cantango continues to widen," concluded Gartman.

"If I can tell people to do anything it's watch the term structure and watch the contango because it tells you more than anything. As the market was rallying a week and a half ago, crude was bidding for storage and the contango was widening. That told you that the peak was in. For right now, demand is weak, supply is large and oil prices want to go down."

OPEC did not immediately respond to a request for comment.