• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Energy

The Time to Buy Oils Is ... Not Now

Let me show you what a bottom looks like.
By JIM CRAMER Apr 30, 2015 | 01:45 PM EDT
Stocks quotes in this article: XOM, COP, CLR, HES, CRZO, WLL, CXO

Is it time to buy the oils? I keep hearing that over and over again and I am going to give you a severe judgment. The answer is NO. Why? Because there was a time to buy them and that time is now past.

We got a lot of chatter today about buying the oils because we now have seen the report from Exxon Mobil (XOM), the big daddy of the group, and it wasn't all that weak. In fact, the company's 2% production growth was superlative and surprised me. I had begun to believe that Exxon just couldn't deliver on that keen line. Oil giant Conoco (COP) also reported and that wasn't so weak either, so some traders are saying the worst is over.

That I agree with.

But to equate the "bottom" in oils with Exxon is to overlook what's been happening for months in the patch and to forget that we got a bottom and that was forged in both bravery and common sense.

Oil, the commodity, is now poised in the high $50s after plunging to as low at $43 when Kinder Morgan (KMI) CEO Rich Kinder came on Mad Money and said oil had gotten too low and belonged at a higher level. Kinder does nothing idle. At the same time as his appearance, he shelled out $3 billion to buy the Hiland Partners pipeline from Harold Hamm, the CEO of Continental Resources (CLR) who, when oil was double that $43 price, had come on Mad Money and called a bottom in crude that didn't stand.

Hamm's Continental had also put its money where its mouth is, taking off all it hedges against oil plummeting at those same high prices, which, of course, turned out to be way too early. Plus, Hamm had to pay his ex-wife a billion dollars as part of a divorce settlement so, while he remains one of the richest men in the country, Hamm may have needed that $3 billion more than most. Either that or he was the ultimate buy-high-sell-low player, the opposite of what Kinder did.

Now that's a bottom.

In that brilliant buy, Kinder got the most important asset in the Bakken, namely a pipeline that could take crude from Continental, Exxon and Hess (HES), three of the biggest North Dakota stakeholders, and send it to the Gulf of Mexico to be refined.

Bakken oil is extremely flammable, kind of like lighter fluid, so it is not ideal for trains that could be exposed to derailment and tanker explosions. It's perfect for pipes, and the only good one is the one that Kinder, in retrospect, stole from Hamm.

In hindsight, we can look back and see a bottom right then in pretty much all of the charts of the oils. At the same time that Kinder bought his pipeline, a series of distressed oil companies offered stock in the market that turned out to be remarkable buys, such as the 4.5 million shares that one of my favorites, Carrizo (CRZO), sold at $45.50 and is now at $57, or the 6 million shares of Concho (CXO) at $108 and is now at $124, or the 35 million shares of a desperate Whiting (WLL) that came at $30 with the stock at $37. That's what a bottom looks like, not this action where many of these oil stocks have now shot up to where they were when oil was at $90. That's right, $30 higher than where it is now.

The best thing you can say about Exxon is that, in bad times, it doesn't do all that badly, and in good times it does fine.

But it's not a "tell" of anything. The real bell rang when the smartest man in oil, Rich Kinder, laid down $3 billion to buy the most prime asset available. That was the most exquisite of timing.

Everyone else who acts now? You are strictly in the Johnny-come-lately class of buyers.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long KMI.

TAGS: Investing | U.S. Equity | Energy

More from Energy

This Energy Play Should Turn Out A-'OKE'

Bret Jensen
Jul 3, 2022 7:30 AM EDT

Let's learn how to make an enhanced yield trade in Oneok.

Welcome to Second Semester on Wall Street, Here's How to Make the Grade

Jim Collins
Jul 1, 2022 4:36 PM EDT

Think you can own big tech? You might just get an 'F' for that. Here's what will get you on the other side of this year.

The Market, It's Such a Gas!

Helene Meisler
Jul 1, 2022 6:00 AM EDT

Commodities like gas came down and people finally noticed. Let's check on that diesel, 30-year bonds and more.

Want to Save Your Retirement Fund? Tune Out the Talking Heads

Jim Collins
Jun 30, 2022 3:14 PM EDT

The first half of this year has been ugly. But we could have seen what would happen to Netflix, Tesla and Meta...

OPEC+ Opens the Spigot, but Are We Just Repeating Mistakes of 2008?

Maleeha Bengali
Jun 30, 2022 12:26 PM EDT

As we see this increase in oil production get rubberstamped, we must remember that demand never moves in a straight line.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:34 AM EDT PAUL PRICE

    A $525,000 Vote of Confidence on Macerich (MAC)

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login