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NEW YORK (TheStreet) -- For TheStreet's Jim Cramer, the magic number for oil prices is $45.
On CNBC's "Stop Trading" segment, Cramer, co-manager of the Action Alerts PLUS portfolio, said West Texas Intermediate has bounced back after hitting a low of $44.35 per barrel earlier Monday. The commodity is now down 0.1% to $45.50 per barrel.
This $45 "level must hold," Cramer said. If oil goes much lower than this, the return on investment for oil companies will be too much of an overhang.
Currently, the return on investment for oil out of the Bakken formation is 1%, while in the Permian Basin it's 3%, he said. In the Eagle Ford Shale, the return on investment is at 0%.
It gets even for worse for the Utica Shale and Marcellus Shale, which currently have returns of -8% and -11%, respectively.
Existing wells are doing fine and can still be lucrative, Cramer said. However, the current returns will likely keep most North American oil companies from tapping into new wells. That's why this $45 per barrel level has to hold, he reiterated.
-- Written by Bret Kenwell