WTI Crude Breaks Below Historic $40 Level, Energy Credit Spikes To Record Highs After Rig Count Rise

Well, we have a winner - Oil broke to a 3 handle before 10Y rates hit a 1 handle (just - 10Y at 2.04%) following the 5th weekly rise in rig count (+2 to 674). Energy credit risk is soaring to record highs as investors realize 'there will be blood' in all those highly-levered loans.  This is the first time the front-month crude contract traded below $40 since March 3rd 2009... just before QE was unleashed in all its asset-inflating, malinvestment-driving, zombifying glory.

This didn't help:

  • *SAUDI LIKELY TO KEEP OUTPUT NEAR 10M B/D THROUGH 2016: BARCLAYS

And then the rig count data hit..

  • *U.S. TOTAL RIG COUNT 885 , BAKER HUGHES SAYS
  • *U.S. OIL RIG COUNT UP 2 TO 674, BAKER HUGHES SAYS

WTI Crude breaks below $40....

 

and Energy credit risk is exploding..

 

Trade accordingly...

 

Charts: Bloomberg