Crude prices should not be so heavily influenced by oil stocks, one analyst told CNBC, saying that their recent correlation is fundamentally flawed.
Speaking after BP reported its worst annual loss in 20 years on Tuesday, Amrita Sen, the chief oil analyst at Energy Aspects, explained that while oil stocks have understandably dropped on the back of bad earnings, there is little reason for crude prices to follow suit.
"Oil company stocks are falling because the results are clearly very poor. But then that drags oil down despite the fact that all these companies…are deferring and cancelling more projects (and) they're laying off more people."
In most cases, efforts to scale back operations should be taken as a signal that the groundwork is being laid for another oil market upswing, Sen explained. But instead, oil traders seem to be interpreting this is as more bad news.
"Equities and oil have become very correlated at the moment but the fundamental logic for it? I'm not quite sure of that," Sen said.