CNBC’s Jim Cramer said Monday that he sees a bull market in oil and gas. He said that along with rising crude oil prices, the merger of two major oil companies is increasing the value of oil reserves.
“I think there’s always a bull market somewhere, and right now it’s in oil and gas,” Cramer said.
Chevron announced Monday that it would buy Hess in a deal valued at $53 billion. The merger comes just weeks after Exxon Mobil agreed to buy rival Pioneer Natural Resources in a $59.5 billion deal in early October.
These recent mergers reminded Cramer of the oil takeovers of the early 1980s, when he said the big companies realized “it’s cheaper to drill for oil on Wall Street than to drill for oil in the ground.” For Cramer, Chevron can use its large balance sheet to make deals that boost its profits almost immediately.
He highlighted Kotera, which he believes is much more than current trading, as well as Conoco.
“Wall Street has been slow to recognize this new trend and seems stuck in a world with an expiration date on oil due to environmental, social and governance concerns and sales of electric vehicles,” Cramer said. “However, oil companies no longer believe in the short exit theory. However, there is another reason to continue investing in these stocks.”
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Disclaimer CNBC Investing Club Charitable Trust owns shares of Kotera.
