Cramer -- Ignore the Reports, Oil is Going to $50
Oil prices fell again Tuesday, hovering between $43 and $44 per barrel around midday.
The decline has reportedly been sparked by fears of a supply glut and decreased global demand.
Oil below $45 per barrel worries TheStreet's founder Jim Cramer, yet he is not wavering in his $50 price target.
While the West Texas Intermediate crude oil forward strip does not predict prices near $50 through the end of 2017, analysts have often lamented that the strip is never right.
And lending a more optimistic view, the International Energy Agency has predicted oil prices should stabilize by the end of 2016.
But a pullback in prices attributable to a strengthening dollar, April production increases from the Organization of the Petroleum Exporting Countries, OPEC, and a decrease in demand from countries like China, is bound to have investors worried.
While Cramer admitted Tuesday that supply has been up in a straight line, he was reassured that the oil production increase reported by OPEC was less than he expected.
Reuters reported that Iraq's oil shipments from southern fields averaged 3.4 million barrels per day (bpd) in April, up from 3.3 million bpd in March.
Production from top OPEC exporter Saudi Arabia was 10.15 million bpd in April, Reuters also reported, citing sources that said Saudi Arabia's production could soon return to a near-record level of 10.5 million bpd.
Meanwhile, The Wall Street Journal reported that OPEC shows no signs of slowing production.
Nevertheless, Cramer suggested the media is off, as he has suggested that U.S. and Chinese oil supply decreases, along with an increase in imports from both countries nearing 1.5 million barrels, will not be balanced by Saudi Arabia.
"Oil, I believe, is going to $50," he said. "I think that the supply is not up nearly enough to be able to meet the demand."
Still, it's critical to monitor the price of oil closely and keep it in mind when investing.
"Oil is going to be treading water here," Cramer warned. "Oil is the most important thing in this market. Oil going to $50 is going to move the DOW."
