Jim Cramer's short-term outlook for oil stocks is bearish, but in the long term, he's bullish, he said Thursday on his
Cramer believes the price of oil is headed to $50 a barrel from Thursday afternoon's price of about $57.80. Cramer said Europe has flooded the U.S. with crude and heating oil following hurricanes Katrina and Rita.
Additionally, temperatures have remained relatively warm in the East, and production and refining capacity in the Gulf of Mexico is coming back online, he said.
Also, the political climate is such that it will be difficult for oil companies to raise dividends or implement buybacks, Cramer said.Long term, however, we aren't finding enough oil to meet demand, said Cramer. He believes oil will be in short supply for eight or nine years until alternatives are developed enough to become viable. Cramer has pared back his oil stocks and plans to hold until oil goes lower. Then he will consider buying again. For now, though, it's too dangerous to buy even for a bounce, he said.