WTI Crude prices could drop into the $40s, with the US oil benchmark in a ‘ferocious’ bearish market.
WTI Crude prices slipped on Thursday by more than 20 % from the 4-year high hit just last month, entering the bear market territory, as oil production in the US continues to grow, Russia and Saudi Arabia put a lot of oil on the market, while the global economy and oil demand growth are starting to show signs of slowdown.
At 11:47 AM CDT on Thursday, WTI Crude was down 0.73 % at $61.22. Brent Crude was also down, 0.86 % at $71.45. On October 3, WTI Crude prices hit $76.41, when the market had been gripped by fear that much more Iranian oil than initially thought would come off the market due to the US sanctions on Tehran.
As the sanctions started approaching, the market started to ask questions how longer demand growth would hold amid oil prices at their highest in four years. Sanctions snapped back on Monday, the markets didn’t even blink and prices further dropped below as the United States said it was granting six-month waivers to eight importers of Iranian oil to continue buying crude from Tehran.
With WTI Crude currently at $61, and asked if US oil prices could slide to $50, Cramer said on CNBC’s ‘Squawk on the Street’ “I could make a case here for the $40s.” Pipelines are coming online in the Permian and Cushing is getting filled up again, which pressures the oil prices to the downside, Cramer said.
“I’m just saying, look out, the economy in the world is slowing down, demand is slowing down for oil, and we’re pumping like mad, and it’s finally getting to market,” he added.