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

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