Summary Since June, oil prices have plummeted 30% on concerns of a worldwide supply glut. Paradoxically, during this same period, the oil rig count has climbed by 74 rigs or 7%. This article analyzes this relationship between rig count and oil price to predict in which direction the rig count will move next. It also analyzes the relationship between oil production and rig count to complete the circuit and determine the evolution of oil supply in response to a change in oil price. Finally, I use this data to pinpoint a 3-month period during which I expect both domestic oil production and rig count to fall which will maximize bullish prospects for oil. My trading strategy based on this analysis is discussed in detail. Since June 24th, crude oil prices have plummeted 31%, as fears of a global storage surplus, weakening Chinese demand, and a strong U.S. dollar have […]