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Charts suggest it’s time to purchase the dips in oil, Jim Cramer says

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CNBC’s Jim Cramer on Tuesday advised investors to place money to work in oil now that the sell-off is essentially over.

“The charts, as interpreted by Carley Garner, suggest that the oil speculators have been mostly worn out, so it is time to buy the dips because she would not be surprised in any respect if crude can rally one other $20 from here,” he said.

Cramer said that Garner’s prediction of a wash-out in oil prices is panning out and oil could head higher as China reopens its economy and the Biden administration looks to refill the Strategic Petroleum Reserve anytime prices dip below $70 a barrel.

To elucidate Garner’s evaluation, he examined the weekly chart of West Texas Intermediate crude futures, the U.S. benchmark for oil.

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Garner believes that if not for the Covid pandemic-induced crash and Russia’s invasion of Ukraine, oil would’ve steadily climbed in a “bullish channel” starting in late 2019, in response to Cramer. 

“After each of those events, oil went back into the channel — notice that — which currently has a floor of support at $70 — you’ll be able to see that — and a ceiling of resistance at $95,” he said.

Oil prices bounced off the $70 floor on Monday, and must be bouncing between these levels so long as the economy stays relatively stable, Cramer said. He added that while prices could dip lower to $65 if the market sees volatility over the vacations, Garner expects their upward trend to proceed.

For more evaluation, watch Cramer’s full explanation below.

Watch Jim Cramer break down fresh charts analysis from Carley Garner

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