Cramer's Stop Trading! Oil and the Margin Squeeze (5/11/11)

Includes: OIH, OIL
by: Miriam Metzinger

A summary of Jim Cramer's Stop Trading! TV segment, Wednesday May 11.

A one penny decline in the dollar is not a reason for oil to drop 5%. The fall in oil prices continues to be the result of margin squeezing. While oil futures were skyrocketing, oil was in glut and oil prices were artificially kept up because of hedge fund managers buying on the margin. When margin requirements were raised, commodity prices dropped. Cramer thinks lower oil prices are good for the economy as a whole and even for oil companies, because as prices at the pump approach $4, consumers drive less and destroy demand. Cramer thinks generally, even some oil companies are a buy on the fall in stocks.


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