Inventories are at 20-year highs, and the prospects for demand growth are fading. Prices are still too high given the fundamentals. Crude oil fell to a six-week low as rising U.S. jobless claims bolstered concern that the economic recovery in the biggest oil-consuming nation is faltering. Rising inventories and falling prices may increase pressure on members of the Organization of Petroleum Exporting Countries to stick to their production quotas. If prices go significantly below $70 with some momentum and stay there, then they take action. Somewhere in the $60 to $70 range is where they would start cutting real production.
One possibility that oil could go up near term is the pending supply of nuclear fuel to Iran's first atomic energy plant from Russia, geopolitical risks near term.