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!?
[4]
and markets are starting to realize that...
[5]
Charts: Bloomberg
