An opening to profit on hot commodities

There's a simple relationship happening between oil and the market right now, and it has created an opening for the hottest of commodities. In fact, Jim Cramer thinks it is so simple that investors could be overlooking it because they are used to so much more complexity!

The simple theory: oil prices are down, so sell oils and buy airlines.

"But you have a bizarre confluence of cause and effect right now that is so simple that you ignore it at your own peril," said Cramer.

A Halliburton worker walks through an Anadarko Petroleum Corp. hydraulic fracking site north of Dacono, Colorado.
Jamie Schwaberow | Bloomberg | Getty Images
A Halliburton worker walks through an Anadarko Petroleum Corp. hydraulic fracking site north of Dacono, Colorado.

On Tuesday morning, Baker Hughes and Halliburton reported earnings. These are two spectacular oil companies that are trying to merge. And to boot, they reported on what Cramer described as terrific quarters.

Though both companies were optimistic, they were aware that oil has been cut in half for 2015. They confirmed that there is still a significant amount of drilling happening with large programs initiated worldwide, thus providing an optimistic long-term view.

This commentary echoed that of Schlumberger on Friday, which caused it to rally to $81 from $76.

However what caught Cramer's eye is something that he thinks will weigh in heavily for the future of oil. All three companies made it clear that they still continue to drill on their best properties in the U.S., and the only way they can meet obligations is to generate more cash flow. The way to generate more cash flow is to produce more, not less, oil.

That's right, oil companies need to produce even more oil.

"If you put it all together, you see production growth that I think can only increase this quarter, and maybe even the next, as the world isn't cutting back, and the U.S. producers must overproduce and tap their best properties," said the "Mad Money" host.

Delta also reported a strong quarter with monster revenues, piggybacking from the price of oil. This was generated due to strong customer traffic, in Cramer's opinion, due to lower gasoline prices. After all, lower fuel costs mean lower travelling costs for consumers.

Delta also confirmed that it would see more than $2 billion in lower fuel cost savings, and even more when the hedges are removed in 2016. It also bought a refinery, which is making significant profits of $105 million.

So what the heck is Delta going to do with all that cash?

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The airline plans to pay down debt and return money to shareholders and is prepared to profit from lower prices of oil—making it a real winner from the windfall.

"The losers? The domestic oil companies who have to pump like mad just to stay in business," Cramer said.

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