What The Rig Plunge Really Means For The Price Of Oil
Arguably the biggest catalyst for the surge in crude, in addition to the technical move which started off with a vicious short squeeze into the NYMEX close last Friday, was last week’s record drop in the Baker Hughes rig count to 1,223, down from 1,609 just three months earlier. That, coupled with the ever louder reports of majors and all other energy companies cutting CapEx, has led some to believe that the supply imbalance is finally starting to normalize, and that production in the coming months will sharply drop off. However, as Morgan Stanley’s Adam Longson explains, that is not nearly the case.
Here are his big picture thoughts on what the recent rig count drop relaly means:
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