WTI Crude prices could drop into the $40s, with the U.S. oil benchmark in a ‘ferocious’ bear market, analyst and CNBC host Jim Cramer said on Thursday.
WTI Crude prices slipped on Thursday by more than 20 percent from the four-year high hit just last month, entering bear market territory, as oil production in the United States continues to grow, Russia and Saudi Arabia put a lot more oil on the market, while the global economy and oil demand growth are starting to show signs of slowdown.
At 11:47 a.m. CDT on Thursday, WTI Crude was down 0.73 percent at $61.22. Brent Crude was also down, 0.86 percent at $71.45.
On October 3, WTI Crude prices hit $76.41, when the market was gripped by fear that much more Iranian oil than initially thought would come off the market due to the U.S. sanctions on Tehran.
As the sanctions start approached, the market started to question 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 as the United States said it was granting six-month waivers to eight importers of Iranian oil to continue buying crude from Tehran. The EIA’s estimates that U.S. oil production would hit 12 million bpd sooner than expected, and another inventory report showing a crude build further depressed oil prices on Wednesday.
With WTI Crude currently at $61, and asked if U.S. oil prices could slide to $50, Cramer said on CNBC’s ‘Squawk on the Street’ “I could make a case for the $40s here.”
Pipelines are coming online in the Permian and Cushing is getting filled up again, which pressures oil prices to the downside, Cramer said.
“I’m just saying: look out, the economy in the world is slowing, demand is slowing for oil, and we’re pumping like mad, and it’s finally getting to market,” he added.