CNBC’s Jim Cramer said Tuesday that investors should be prepared to buy oil next month, based on chart analysis from Carley Garner.
“She thinks there could be a final discharge from this week, possibly early to December, and that discharge could push crude oil prices as low as $70, or even was between $60. When we got there, she believed it could be the mother of all buying opportunities,” he said.
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West Texas Intermediate Crude oil futures, the US oil benchmark, saw big swings this week after The Wall Street Journal reported Second, OPEC members are considering adding 500,000 barrels per day to the December OPEC+ meeting. Saudi Arabia later denied report. News about Covid-related deaths in China The weekend also contributed to oil volatility.
WTI crude oil futures were steady at $80.95 a barrel on Tuesday.
To interpret Garner’s analysis, Cramer first examined the chart of the seasonal pattern of WTI crude.
According to Cramer, this chart shows how oil tends to perform at different times of the year and reveals that Thanksgiving week tends to be bad for oil. “Historically, some of the most severe oil drops have occurred on or near Thanksgiving Day,” he said.
The chart shows the price of oil futures dropping $10 on the Friday after Thanksgiving 2021. Crude oil fell 10% during Thanksgiving week in 2018 and fell nearly 14% in 2014, he added.
Garner’s explanation for why Thanksgiving tends to take a toll on oil is that this week includes the last trading day for December oil futures and there’s always a meeting of OPEC in late November or early December.
“The fact that the holiday weeks tend to be very light volume means that any move tends to be overblown as it doesn’t take long. [as] Cramer said.
For more analysis, check out Cramer’s full explanation below.
