Ahead of Thursday's OPEC meeting, and in light of the fact that so many things are going right in the U.S. economy, Jim Cramer thinks it is time to talk oil prices, with a side of gravy.
There tends to be a frame of mind among many that oil prices are wild and could go anywhere—that nobody knows what will happen.
Cramer is calling bluff and thinks maybe oil has finally reached its sweet spot.
With a fabulous 3.9 percent growth rate in the U.S. announced on Tuesday, it looks like we will continue to accelerate. That means that the demand for oil will grow as well. Yet, there is a deceleration of growth in almost every other country but India, which puts America in a novel position.
"I think it is safe to say that when it comes to demand, we are counterbalancing pretty much everyone else," the "Mad Money" host said.
With the economy in perspective, Cramer took out his crystal ball and is predicting that oil prices will not rise higher following the OPEC meeting.
The Saudis cannot allow oil prices to go lower than they already are without risking a break-up of the Organization of the Petroleum Exporting Countries, Cramer said. Even though, in Cramer's perspective, the rest of the nations in OPEC are brainwashed into following the Saudis to stop the U.S. energy independence, they know when to stop. In addition, the government budgets of Venezuela and Nigeria need prices to stay right where they are.
Onshore in the U.S., though our rules prohibit the exportation of oil from 48 states, we can still export gasoline. This is keeping the world of oil in balance. Even the technology that we are using these days won't infringe on oil budgets, as long as they don't go lower than the mid $70s. Hence, the U.S. has the ability to maintain current prices even if OPEC decides that higher prices are the way to go.
"Most Americans, I think, believe that gasoline's down on a blip and will go right back up. But we are producing too much to have that happen," added Cramer.
He thinks that supply and demand are actually equal right in the mid $70s, where it is now. So, it looks like oil could have hit its sweet spot, and the "correct" prices are here to stay, give or take $5.
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If this is indeed the equilibrium for oil, then Cramer advises investors to be prepared that the American consumer will continue to spend money elsewhere into the economy.
"That is, in many ways, the perfect world for the economy and the stock market and is worth remembering whenever you get too bearish about our current situation."
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