07-29-2015, 01:11 AM
Bloomberg says that "Oil extended losses in a bear market as a rebound in U.S. drilling signaled that producers can withstand lower prices and may keep adding supplies to a global glut."
That conclusion is unwarranted. The addition of some rigs certainly doesn't indicate that producers can withstand lower prices. What the addition of rigs may indicate is that some companies jumped the gun a bit and signed some drilling contracts when oil recovered to $60. Or that some drilling was necessary to hold leases.
That conclusion is unwarranted. The addition of some rigs certainly doesn't indicate that producers can withstand lower prices. What the addition of rigs may indicate is that some companies jumped the gun a bit and signed some drilling contracts when oil recovered to $60. Or that some drilling was necessary to hold leases.