Oil traders and speculators could see the “mother of all buying opportunities” for WTI crude oil in December, as oil prices are about to dip further in the coming days, CNBC’s Jim Cramer says.
Oil prices have traded down so far this month, as fears of recession and China’s surging Covid cases have weighed on market sentiment despite the imminent EU embargo on imports of Russian crude oil by sea.
Early on Wednesday, Brent Crude traded at $85 per barrel, and the U.S. benchmark was below $80—at $78 a barrel after reports emerged that the EU is currently discussing a price cap on Russian oil of around $65-$70, which isn’t really capping the price of Russia’s crude which trades at a $20 a barrel discount to Brent anyway.
Citing a chart analysis by Carley Garner, co-founder and analyst at Decarley Trading, CNBC’s Cramer said that “She thinks there could be one last washout from this week, possibly early through December, and that washout could take crude down to the low $70s, or even the mid-$60s. Once we get there, she believes that could be the mother of all buying opportunities.”
According to the analyst, WTI Crude typically registers a big slide on or around Thanksgiving Day, exacerbated by thin trading volumes around the holiday and an OPEC meeting which is always held at some point at end-November or early December.
“Historically, some of the most devastating oil declines have occurred on or about Thanksgiving day,” Cramer said on Tuesday.
While oil could later rebound, a possible rout and turbulence in oil prices from Thanksgiving Day through early December could be a huge buying opportunity, according to Jim Cramer.
Earlier this week, investment bank Goldman Sachs slashed its oil price forecast by $10 to $100 per barrel for the fourth quarter, citing lockdowns in China that would dampen demand for the commodity.