Charts suggest oil could bounce temporarily then head lower, Jim Cramer says
CNBC’s Jim Cramer on Wednesday said that oil could rally in the short term, but it’s unlikely to last.
“The charts, as interpreted by Carley Garner, suggest that oil could be due for a short-term bounce, but over the next few months she ultimately sees it headed lower — possibly much lower. That’s exactly what the [Federal Reserve] needs to see [to tamp down inflation],” the “Mad Money” host said.
OPEC+, a group made up of OPEC and non-OPEC partners, said last week that it is sticking with its planned oil output increase in August, going against urging to ramp up production even more to help bring down global crude prices.
Garner believes that OPEC recognizes there’s global demand destruction for oil and thinks the global economy can no longer support $100 crude, according to Cramer.
To start his explanation of Garner’s analysis, Cramer first examined the monthly chart of West Texas Intermediate crude.
Garner predicted that oil would return to levels from before Russia invaded Ukraine, and suspected it would have struggled to go above the low $90s if not for the war, said Cramer.
Garner believes that crude has already returned to its historic trading range and wouldn’t be surprised if another breakdown below $90 helps spurn a decline back down to $60, Cramer said.
“Wherever oil might be headed, though, Garner’s confident this will be a wild ride,” he said.