CNBC host Jim Cramer said $40 oil plus retailer price cuts would send US inflation sharply lower. That requires Brent crude to lose roughly 56% from Tuesdays level.
Octobers Consumer Price Index (CPI) rose 0.4%, topping the 0.3% forecast, after Brent gained more than 15% that month. That keeps a Federal Reserve hike in play, a risk for Bitcoin (BTC) and other risk assets.
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Can Cheaper Oil Really Cool Inflation？
Cramer argued on Tuesdays Mad Money that oil feeds into food, recreation, and motor vehicle insurance prices.
He cited a chart of Valero, a US oil refiner, as pointing to $40 crude. However, the scenario also assumes Walmart and Costco force price cuts onto suppliers.
“youre going to see the CPI come down and come down hard.”
Jim Cramer, host of CNBCs Mad Money, in a broadcast
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Brent fell to about $92 on Tuesday, as Trump held off on Iran strikes. Oil had also slid on a reported US-Iran Hormuz deal, though renewed escalation could reverse the move.
Brent gained more than 15% in October, per TradingEconomics. It was up about 60% for the year in late September, per OilPrice. In contrast, a fall to $40 would erase that gain and more.
Would Oil Alone Change the Feds Path？
However, headline CPI rose 0.4%, per CBS, while core CPI, which excludes food and energy, gained 0.3%, per Morningstar.
Notably, Fed Governor Christopher Waller said a 0.3% core reading would make him weigh a half-point December hike.
Meanwhile, Dallas Fed President Lorie Logan separately called for at least two more quarter-point hikes.
Bitcoin fell as the print triggered about $200 million in crypto bet liquidations.
The Fed meets Dec. 8 and 9, one day before November CPI is published. Oil relief would therefore reach the data after the Fed decides, leaving risk assets exposed to the rate call first.