Activity in the futures market indicates oil prices are headed "stunningly" lower, says Dennis Gartman, publisher of the Gartman Letter.
Oil has plummeted 58 percent since late June, falling to a six-year low of $42.75 a barrel Thursday amid sluggish demand and bountiful supply.
"For months I've said that crude oil is heading from the upper left to the lower right of the chart," Gartman tells CNBC
. "I wouldn't be surprised if oil went down to about $15 a barrel." Excess supply is the big issue, he notes.
As for the futures market, far-out crude contracts are trading higher than near-term crude, a situation known as contango. That contango stems from excess supply.
"We're going to have an abundance of crude. Storage is going to be topped out very soon and the front month spread is going to continue to deteriorate," Gartman explains. And that means prices will keep dropping.
"No if, and or but about it," he adds. "As [the contango] widens, your propensity, your urge, your intense and any [other] desire to be a buyer of crude will be deferred."
Meanwhile, we can thank Saudi Arabia for much of the oil price plunge, according to Richard Fisher, president of the Dallas Federal Reserve. "The Saudis have engineered" the move, he said in a speech last month, CNNMoney
Saudi Arabia led OPEC to reject production cuts, and the nation has offered price reductions to its customers. Presumably the Saudis are trying to drive high-cost suppliers, such as U.S. shale oil producers out of business.
"We are a huge supplier of energy. The Saudis took a while to realize what was going on," Fisher said, referring to the growth of U.S. output.
Low oil prices also cause pain for Iran, Saudi Arabia's hated neighbor, he noted.
Given Saudi Arabia's policy, Fisher doesn't expect oil prices to rebound back to $100 anytime soon. "From a budget stand point, [the Saudis] have reserves that can handle this," he said
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