Cramer: Energy Bulls Could Slip, Lose Foothold

(Click for video linked to a searchable transcript of this Mad Money segment)

Jim Cramer can't help but notice the surprising divergence between Brent and almost every other commodity.

"We are seeing almost a total collapse in the commodities space," Cramer noted. Year to date the DBA, which is an ETF that tracks a wide range of commodities including corn, sugar and soybeans is about 8% lower.

Some of the price slumps have been far more dramatic.

One striking example is copper, which, at its worst in April, had slipped 14% since the beginning of 2013. Also, "The Baltic Freight Dry Index has been unable to sustain even a couple days' worth of rallies during this last month," Cramer added.

All told, the weakness has been wide ranging.

However, the Mad Money host has noted an unusual exception – Brent. "The price of Brent crude, is still hovering at $100," he said.

oil and gas

That's significant because Brent, rather than WTI or West Texas Intermediate, tends to be the global benchmark. Many pros base their investment strategies on the price action in Brent.

And the divergence suggests either Brent is about to break down; or other commodities are about to play a game of catch up.

Cramer thinks the more likely outcome is the former – a break down.

That's because the Mad Money host always considers fundamentals in his investment decisions and he thinks fundamentals are bearish for Brent. That is, there's plenty of oil on the market and it looks like supplies could increase significantly.

"Iraq adds to production by the day, Libya's back on line and Iran is still able to pump out plenty of oil despite the soft embargo," Cramer said. And that doesn't even begin to take into account the impact of the vast 'unconventional' supplies discovered across North America.

Therefore, with other commodities down and WTI trading $91, Cramer said "I think Brent could be about to break $100 decisively."

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"Although that's great news for consumers because it should drive prices at the pump lower, it also makes oil stocks a sell," he added.

"I expect this group could join the rest of the commodity producers and go lower," Cramer said. "Therefore I believe it is time to underweight energy. I'd do some selling in the oil services stocks, now."

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