Jim Cramer on Oil

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All quotes by Jim Cramer on Oil

I think corporate America has finally given up on our dysfunctional government and is now going full speed ahead on acquisitions. Ripe areas? Drugs, aerospace, even oils, if the price of oil were to drop to the low $40s where I think it's headed. All bad news for the shorts and a bit of welcome good news for the longs.feedback

The trouble with the oil market right now, in Garner's view, is that the buyers all feel like eternal optimists and they won't let multiple failed rallies stand in the way of their conviction. Take a deep breath, chill out, and for heaven's sake, learn from your mistakes!feedback

When you check out both the weekly and the daily charts for copper, you see a bunch of indicators that suggest it's already way overbought.feedback

Here's the bottom line: The charts, as interpreted by our go-to commodities person, Carley Garner, suggest that crude oil could soon fall off a cliff while copper might be running out of momentum. Neither of these is what I'd call a good sign. You know what? I'm on board with both calls.feedback

As of the latest report, large speculators [were], once again, awful. They had a net long position of 445,000 futures contracts. Now, that is shy of the 500,000-plus reading we had earlier this year – also at elevated levels, though – but Garner says it still points to an extremely one-sided trade. In short, if hedge fund managers were going to bet on oil, they've probably done it already, which means there's little chance of fresh money coming in to push up the price of crude.feedback

With these BHP assets for sale, we can find out what this shale acreage is worth. Estimates for the properties [are] all over the map. Suffice it to say that if there are bidding wars for these assets and they fetch anywhere near $10 billion, then every oil stock we follow is way too cheap and you've got to buy them hand over fist. Anything less than $7 billion, they get a big leg down.feedback

The reason? Listen, you need to understand that the business world is made up of cycles. There are all sorts of cycles. There's the housing cycle, the consumer spend cycle, the auto cycle, the tech spend cycle, the non-residential construction cycle, the truck build cycle, the oil and gas cycle, the mineral cycle, the aircraft cycle... a lot of cycles. And other than autos and the oils, all of these other cycles are in the sweet spot.feedback

When you're talking about construction equipment coming back without an infrastructure bill. When you talk about favorable price realization for energy without oil above $50. How many people did these guys get rid of? I mean this is an incredible streamline cat.feedback

Kibsgaard, in other words, thinks the jig is almost up and that producers who exceed their cash flow will be cut off. If that's the case, if the U.S. spigot finally slows down, then oil can indeed start to go higher.feedback

If you do not know the stock or the company Schlumberger, it's a marvel, the oil service company that remains the gem in a very tattered industry. I've got a real bad feel for what he's going to say this time, mainly that oil's not going higher and activity will be subdued for the rest of the year and perhaps much of 2018.feedback

My argument here is that in the last two days, a group of people have decided that not everything in oil is worthless. And if you want to know one that's not worthless, it is Apache.feedback

There's no better sign of worldwide growth than CAT hitting those hallowed levels. I'm a strong believer in what our resident commodity seer, Carly Garner, has said since she told us to sell in the $50s and buy in the low $40s – oil is range-bound. She seems pretty confident, now that it ticked to $46, that it's going to $50 next. Don't forget to sell when it gets there, though.feedback

Why are so many energy stocks down versus where they were trading when oil bottomed early last year? Because in January of 2016, many investors believed oil and gas could rapidly come roaring back, maybe $60, maybe $80, but these days we've come to accept the lower for longer thesis. Still, I think there's value in stocks like a Carrizo, which have a real and I think sustainable rate of return down here, it just might take a long time for them to get the credit they deserve.feedback

Once that happens, we go right back down to $40, and perhaps even fall to the high $30s, which is why Garner's tentative target is for oil is $39.feedback

So many traders assume the momentum will continue in either direction, and they keep getting caught on the wrong side of the trade, which Garner says is exaggerating the volatility of the oil market.feedback

At the same time, we've got a floor of support in the low $40s. So the next time you feel like going all in on the oils near $50, please just refer back to this chart. Above $50, many producers in the Permian [Basin] can come in and make a fortune selling oil futures, so the market gets flooded with new supply, and when you increase supply without boosting demand, prices go down. That is economics 101, people.feedback

This market lives on the edge at all times because it no longer trades in unison. It's made up of a whole bunch of little submarkets. So stay in the bull markets, namely tech and health care, and avoid the bears, like oil and retail, and you'll be just fine.feedback

You can't have both of those go up. It's antithetical. That is like oil and water.feedback

Elliott Management's debacle with Hess is very enlightening, because at the time it seemed like Elliott knew what it was doing, but a couple of years later it became clear that they had put Hess in a really poor position to deal with the huge sell-off in oil.feedback

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Quotes by Jim Cramer on Oil

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