Tags: Cramer | oil | supply | 70

Jim Cramer: 'Perfect Storm Against Oil'

By    |   Wednesday, 15 October 2014 01:01 PM

Oil prices continue to plunge, with the November West Texas Intermediate contract hitting a two-year low of $80.01 a barrel Wednesday, amid sluggish demand and copious supply.

So how low can oil go? CNBC commentator Jim Cramer says $70 a barrel. "Sixty dollars is, I think, extreme," he said. "I think $70, $75 is possible."

November crude traded at $80.97 at late Wednesday, down 81 cents from Tuesday.

Stagnant global economic growth has helped fuel the downturn. While the U.S. economy expanded at an annual rate of 4.6 percent in the second quarter, the eurozone registered zero growth, and Japan's economy shrank 7.1 percent.

Meanwhile supply is soaring, with U.S. oil output at its highest level since 1986. And various OPEC members, including Saudi Arabia, have recently cut prices.

"This is uniquely a perfect storm against oil," Cramer noted. If oil does breach the $70 level, he expects a "concerted slowdown" in production.

Others too see further weakness ahead for oil prices.

"The supply boom is ongoing," Michael Lynch, president of Strategic Energy & Economic Research, told Bloomberg. "Nobody sees any reason to buy, so people just keep selling. The Saudis will have to cut production to stabilize the price."

Tom Kloza, chief oil analyst at GasBuddy.com, says the stakes are large.

"This is not your garden variety autumn price decline," he told The New York Times. "Clearly there is a rift in OPEC, and that means we are more likely to see a price war over the next six months. Crude oil is teetering on the brink of collapse."

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Oil prices continue to plunge, with the November West Texas Intermediate contract hitting a two-year low of $80.01 a barrel Wednesday, amid sluggish demand and copious supply.
Cramer, oil, supply, 70
262
2014-01-15
Wednesday, 15 October 2014 01:01 PM
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