Rising oil production from non Organization of the Petroleum Exporting Countries (OPEC), combined with issues over OPEC cutback compliance and the growing consensus that the cutbacks aren't enough to dent to global supply glut all conspired to keep crude on its downward price spiral Thursday - and analysts are stating that the once-remote fear of oil in the $30s is now a distinct possibility.
West Texas Intermediate settled 34 cents lower at $47.70 per barrel, and Brent dropped 11 cents to $50.53 per barrel - a far cry from the 2017 high of $58 when the OPEC deal to limit production came into effect in January.
As usual, the influences were data from the Energy Information Administration, which on Wednesday reported that U.S. inventories jumped by a much bigger than anticipated 5 million barrels last week to 533.1 million; and the ongoing saga of OPEC members abiding by their self-imposed agreement and trying to put a positive spin on renegade members and non-members undermining their efforts by pumping full-out.
Oil ministers from OPEC and some non-member nations will meet on Sunday in Kuwait to discuss compliance, but Oliver Sloup, director of managed futures at IITrader.com, says, "OPEC is going to do their best to jawbone this market higher, but it seems the market is going to do its best to reject that.
"We think there won't be as much follow-through from OPEC as there has been in the past."
Some experts insist that crude will bounce back to as high as $60 later this year (Barclays is the latest to state as such, forecasting the second quarter of 2017 as the time for recovery), but this upbeat assessment is based mainly on the argument that growing global demand will outstrip rising production - and unfortunately, for every optimistic analyst there seems to be an equally persuasive report that key players such as China are sending huge volumes of crude overseas, because they are refining more fuel than the domestic market can absorb.
An increasingly prevalent viewpoint was expressed Thursday by Gene Marcial, manager market research at Tradition Energy, who told CNBC with regards to the OPEC cutbacks, "Without the production cut agreement, I think you could basically target the low-to-mid $30s; I'm of the mind they extend it."
"The Saudis need the revenues from higher oil prices; they know that prices at $30 to $35 is trouble for them."
But if compliance by non-member isn't achieved, then crude in the $30s is inevitable under Marciel's scenario, since Saudi Arabia, the de facto leader of the cutbacks, has repeatedly stated it will continue to play along only if other nations carry their fair share of the load.
With the six-month cutback initiative all but declared to be a bust and rising production from so many nations making the cartel's 1.2 million barrel per day reduction seem minuscule, the analytical community is now united in expressing hope that a cutback extension to a full year will now take place and ward off market disaster.
Helima Croft, global head of commodity strategy at RBC, told CNBC that producing nations will agree to an extension because of their own economic concerns: "Do they really want to flirt with the $30s? Is that something that's going to enhance their ability to lead in one of these petrostates?"
She argued that a global supply rebalancing is already underway: "Everyone is focused on the U.S. … If you look outside the U.S., you look at places like Japan; we're seeing the rebalancing.
"The U.S. is going to be the last."
Of course, the discrepancy between the oil market and the actual state of the global industry is perpetual, and on that score Eric Lee, energy analyst at Citi, earlier this week rationalised the current market woes by pointing out that the price declines are attributable to "some of the air coming out."
He further explained, "there were extremely high levels of money management as fund positioning on the long side for oil; what we've seen over the last week with the selloff is a lot of that flushed out, and we're back at more reasonable levels - and this gives us a bit more confidence that we'll be finding more of a floor at $50."