NEW YORK (TheStreet) -- I was talking to Jim Cramer today about oil and the recent weakness of domestic exploration-and-production companies and where there might be remaining opportunities in the oil patch.
There has been a continuing glut in Cushing, with six straight weeks of oil stockpile builds. That has put pressure on domestic oil prices, now seemingly in a range from $93 to $96 a barrel. But global oil prices remain at more than $100 a barrel because of continuing unsettled negotiations with the Iranians over their nuclear aspirations, the continuing unrest in Egypt and the total shutdown of production in Libya from a new civil schism.
All of that has led to a strong difference between U.S. and global crude oil prices, driving the profitability of the refiners, a sector I have been highlighting as the place to be in the oil patch in the fourth quarter. Until those differentials relax from the double digits they've been at, I still believe this is the place to be, with stocks including Tesoro (TSO), Valero (VLO) and Phillips 66 (PSX).
As for the exploration-and-production companies, investing in them requires caution. Although I don't think the thesis of U.S. oil production has entirely run its course, there needs to be a stronger correlation between U.S. and global crude prices to drive these companies' shares higher from here.
One exception has been Devon (DVN), recently in a deal to buy an Eagle Ford shale producer in GeoSouthern. But despite my recommendation of Devon as an undervalued exploration-and-production company, this $6 billion deal is a stronger recommendation for the private equity company that is cashing out on it: Blackstone (BX).
Does Blackstone ever get anything wrong? The doubling in its shares this year tells you a lot about how smart it is. I talk more about all of this with Jim in the video above.
At the time of publication, Dicker owned shares of DVN and TSO.
At the time of publication, Action Alerts PLUS, which Jim Cramer co-manages as a charitable trust, had no positions in stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.