Exuberant Crude Bounce Reverses, WTI Tests $47 Handle As 'Rig Count-Production Link' Meme Breaks

Submitted by Tyler Durden on 02/02/2015 09:02 -0500

• Crude
 
• Saudi Arabia

inShare

 

It appears the new narrative for why oil prices surged Friday and this morning is that a record-breaking drop in the US Rig Count means production levels will drop (and thus Saudi Arabia wins). This was enough to spark a melt-up squeeze on Friday which extended this morning running stops above $50.50. However, since that stop-run was exhausted, prices have tumbled back lower - testing a $47 handle - as investors realize the link between production and rig count is spurious at best and anti-correlated at worst.

Thge last time rig count tumbled... production rose!?

and markets are starting to realize that...

Charts: Bloomberg

Average: