Well that’s the headline from Bloomberg. I’m not too sure that after a fall from $100 we can consider oil to be bullish on any level.
Interestingly price has spiked over the last few days on the back of a reduced rig count.
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.
The thing to note is that rig count and overall supply are too very different things.
I’m still very much bearish oil. Of course overall supply is a huge factor, however the big issue for me is that oil is often a leader when things go bad. Regardless of what the mainstream media sprouts, the worldwide economy is not in a great state. We’re already seeing what you might consider a flight to safety into the USD and bonds – with the later very much headed into a bubble.
So for now I’m still bearish on oil.