Oil Prices: Factors Behind Recent Drop and Future Outlook

The drop in oil prices this week can be attributed to several factors, including technical selling after the $80 level was broken, a switch from backwardation to contango in the oil market triggering bearish curve selling, seasonally weak crude demand, low net long speculative positioning, increasing OPEC exports, unexpected rise in global crude inventories, Iran's continued production, concerns over demand uncertainty, and unclear signals from China. While there may be short-term upside potential, mounting concerns of slowing demand could limit a significant relief rally in the coming weeks. However, there is a compelling reason to buy the dip in oil, with expectations of Saudi/OPEC tightening measures in Q1 and longer production curbs.