Jim Cramer has dire prospects for the oil industry no matter who wins the White House next month.
On Thursday episode of “Bad money“The CNBC host said the oil market faces a difficult future after the November election under a second Trump administration or a potential Biden administration.
“I would say stay out of the group because my long-term prognosis is bleak.”Bad money“Host said.” Regardless of who wins the election next month, it will be bad news for the oil industry, “he said.
During the Vice Presidential Debate the night before, Vice President Mike Pence and Vice Presidential Candidate Sen. Kamala Harris discussed what fracking and fossil fuel policy would look like with President Donald Trump or potential President Joe Biden in office.
U.S. oil producers are generally not investable as crude supplies are in excess in an environment with limited travel opportunities and the direction the energy is moving, according to Cramer.
“President Trump is a drill-baby-drill guy,” and over-drilling has “pushed the price of crude down,” he said. Biden may not ban fracking, but “Democratic presidents tend to hit the entire oil complex with more rules and regulations, which is really bad for profits,” he added.
In the Utah debate, Pence said Biden is campaigning for fracking to be banned, an accusation Harris denied. In his $ 1.7 trillion climate change plan, Biden sets a goal for the US to reduce its greenhouse gas emissions over the next three decades by providing the country with clean energy to face the realities of climate change.
Trump has not come up with a plan to deal with growing climate problems, but the president has touted himself as a pioneer in the energy market and promoting oil production.
“In both cases, the future for the oil complex does not look bright. I do however expect the oil will rise again because so many investors are counting on it between here and the end of the year,” said Cramer. “More and more money managers are realizing that oil is not investable, but that doesn’t mean it isn’t not tradable.”
Oil prices continued to rise Thursday, rising more than 3% after falling the previous day. Brent The crude oil futures were $ 43.45 West Texas Intermediate Crude oil was $ 41.35 a barrel late Thursday. Both benchmarks have fallen by almost 30% since the beginning of the year.
While the demand for oil grows as business and activity seek to rebound, the supply side of the table is what worries Cramer.
The host, who is bearish in the oil market in general, offered two ideas for investors looking for lagging stocks in this space. He advocated Chevron, which is down 37% this year, for paying a dividend of 6.85% and Parsley energy, which has declined 46% since the beginning of the year because it grew double-digit before the economic crisis triggered by the pandemic.
“As the price of crude oil rises to $ 45, I bless you … buy chevron or parsley on a trade,” Cramer said. “Chevron has that dividend; parsley has the growth.”