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Sometimes a market will move in response to a new fact reaching traders and investors.

Sometimes, though, a financial market will change direction because traders and investors choose to emphasize a different set of facts today than yesterday.

And that’s where we are in the oil market right now.

Before the holiday trading break oil rallied. The “fact” that drove U.S. benchmark West Texas Intermediate to $47.07 on July 3 from $43.38o June 26 was a slight drop–a decline of 1 rig for the week that ended on June 30–in the U.S. count of active drilling rigs. The decrease, small as it was, still was the first drop in 24 weeks, and led to speculation that U.S. oil shale producers were finally about to reduce production. That would mean less oil on the markets and higher prices as production cuts from OPEC members reduced a surplus on the global market.

At the same time, however, the oil markets were choosing to overlook another “fact”: Production from OPEC countries had soared in June. Members of the Organization of Petroleum Exporting Countries had increased production by 260,000 barrels a day in June from May levels. The major culprits were Iraq and Nigeria as usual–both countries are exempt from OPEC production targets– but even Saudi Arabia, OPEC’s cheerleader for production cuts to end the global supply glut, had increased production in June by 90,000 barrels a day.

The market’s willingness to overlook that increase in OPEC production came to a sudden halt–as did the oil price rally on July 5. In the first day of trading after the July 4 holiday West Texas Intermediate fell back to $45.13 from the July 3 peak at $47.07 on worries about OPEC production and news that Russia would not look favorably on further efforts to cut production to raise prices.

Today, July 6, the market has been of two minds (at least.) West Texas Intermediate climbed in the morning to $46.47 a barrel at 11:05 a.m. New York time (from the prior close at $45.13) on news that the American Petroleum Institute was forecasting higher demand and a bigger than expected draw down in U.S. inventories. But the afternoon session saw West Texas Intermediate drop back to $45.30, a scant 0.35% above the previous close. The U.S. Energy Information Administration reported that while crude inventories fell by 6.3 million barrels last week, U.S. production rather than falling had continued to climb, gaining 88,000 barrels a day. (Reminding those that extrapolate from the falling rig count that changes in drilling technology meant that companies could get more oil out of existing wells.)

My take on all this: Traders in the oil market continue to want to believe that OPEC supply cuts will raise oil prices and continue to underestimate the ability of U.S. producers to increase production even at low prices. Call that the triumph of hope over experience. Increasing production from U.S. oil shale companies, however, seems fully able to dash that hope–repeatedly if necessary.