Oil Can Go to $40, But Needs $50: Jim Cramer

Katherine Ross

Need an oil update?

Jim Cramer had some thoughts on oil on Mad Money last night. Here's what TheStreet's Scott Rutt wrote in his Mad Money recap:

With oil prices having rebounded from -$37 a barrel to $37, is it time to take a second look at the oil stocks? Cramer said he continues to believe that the future does not belong to fossil fuels. But in the short term, there might be gains to be had.

Cramer cautioned that investors cannot count on the dividends of oil producers, with the single exception of Chevron (CVX) - Get Report. Chevron's current 5.4% is safe and the only one worth investing in.

Beyond Chevron, Cramer advised staying out of oil pipeline stocks, as there are now more pipes than oil being produced. As for the oil producers themselves, Cramer said Pioneer Natural Resources (PXD) - Get Report is his favorite. Pioneer has the best assets and among the lowest costs at just $4.80 a barrel.

For growth, Cramer recommended EOG Resources (EOG) - Get Report and Diamondback Energy (FANG) - Get Report, along with Parsley Energy (PE) - Get Report.

So, how should investors approach oil now?

Jim Cramer sees a possibility that oil can head to $40, but says prices would need to sit around $50 for anyone to make any money. 

Catch his full take on the commodity in the video above. 

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

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