The price of crude oil keeps falling as President Trump selects his top team, reinforcing the belief in the energy markets that there is enough oil in stock at present.
As of 15:20 GMT on Wednesday, the prices of WTI and Brent were at $67.34 and $71.02 respectively.
The gloomy market sentiments have been exacerbated by the concerns over the diminished demand in China, the world's largest importer of the commodity.
Although China's manufacturing PMI, a key indicator that reflects Chinese manufacturing activity, was above the threshold, 50%, in October, it has not been a catalyst to lifting up the mood among analysts and investors - to see the light at the end of the tunnel.
In addition, there are growing fears that President Trump will impose tariffs on the Chinese goods that come to the US, as promised during the presidential campaign. A move of this kind will lead to a trade war between the world's two largest economies, as it happened during President Trump's first term in office. Of course, China would hit back, with the scope and scale of which remain to be seen in the early part of next year.
President Trump does not want China to buy oil from Iran while the international sanctions against the latter remain in force either. If enforced vigorously, China will be compelled to look for alternative sources to address the issue of oil imports.
The appointments of the well-known hardliners, both on Iran and China by President Trump for his new administration, imply that he is determined to get tough on both countries with the so-called maximum pressure policy. If Iran's supply of crude oil is disrupted, by picking on both obvious and clandestine buyers, there will be a possibility of global crude stocks going down.
They, however, can be replenished easily by turning to non-OPEC producers and boosting America's own shale oil production in line with President Trump's 'drill, baby, drill' mantra: not only will he expand the federal leasing for oil and gas drilling, but also roll back the environmental regulations - something that President Trump sees as an over-regulation.
The OPEC+, meanwhile, is admitting that they got the global oil demand wrong; it is not as high as they thought, something that can easily be attributed to slowing manufacturing activities in China. The cartel has already postponed the anticipated easing of the production cuts twice; the OPEC+ now expects to implement it in January.
If OPEC+ sticks to easing the production cuts as promised in January next year in 2025, in the presence of more oil from the US, the heavy supply can weigh on the prices. In the meantime, some of the members have defied the 'big guns' of the OPEC+ and increased the production while elevating their market share despite the well-publicised monitoring in place.
President Trump, meanwhile, intends to fill up the SPR, Strategic Petroleum Reserve, when he is officially in power. Since the prices of crude are falling, he will be able to achieve it while securing the supply for the US, to be used in the event of emergencies or war like situations.
If the prices of crude oil falls precipitously, then, it will backfire on the shale oil producers in the US. This is what happened in 2012: in 2012, Saudi Arabia, through OPEC, attempted to undermine U.S. shale oil production by increasing their own oil output to lower global oil prices, making it economically challenging for high-cost shale operations to remain profitable. Their strategy aimed at both maintaining market share and discouraging investment in new, non-OPEC oil ventures.
Moreover, the falling oil prices can affect the Middle Eastern producers as well in the long run that in turn will affect the global economy. In shot, there is a need of a balance being struck, when it comes to the oil equation of supply and demand.
All in all, the price of oil and gas will struggle to stay at the current level in the presence of low demand from China and plenty of supplies, even before the inauguration of the new president in the US - up until the new administration makes its energy policies clearer.
