Over the last week, crude markets lost steam - rather rapidly. Prices fell to a fresh three-month low near $71 a barrel on Friday, as volatility across markets magnified existing concerns about the buildup of supplies. There are now talks of even lower prices. The market is now poised for a test of the $70-a-barrel level. The last time benchmark crude oil futures on the New York Mercantile Exchange ended below that was in December.

Light, sweet crude oil for June delivery on the New York Mercantile Exchange settled at $71.61 a barrel, down $2.79 a barrel, or 3.8 percent, dragged down by swollen US crude inventories and concerns that the European debt crisis would curb future energy demand growth.

Question marks about the state of global economy are coming to fore, with important and influential voices underlining that the global economic woes were far from over. Chinese Premier Wen Jiabao, while addressing the fourth ministerial meeting of the Arab-Sino Cooperation Forum, struck a cautious note about the global economic recovery, emphasizing that the global financial crisis was leading to "profound changes in the international balance of power." Wen warned that the European sovereign debt crisis is "deepening" and the foundations of a global recovery are not yet "solid".

"We should recognize that as a result of this once-in-a-century financial crisis, the world political and economic landscape is undergoing major adjustments and transformation."

Concerns that rigorous fiscal tightening in Europe following the Greek debt crisis could imperil the still tentative economic recovery, crude market sentiments started to melt. "The European debt crisis has made us question the growth outlook for the global economy and therefore fuel demand," said Toby Hassall, an analyst at CWA Global Markets in Sydney.

And in the meantime, fundamentals in the US continue to be weak. Crude inventories are rising, defying predictions that a recovering US economy will ultimately boost demand. And this was confirmed when the US Energy Information Administration said Wednesday that oil supplies increased more than expected last week resulting in further stock build up. US stockpiles have now grown for 14 of the last 15 weeks. Stockpiles of crude at Cushing, Oklahoma, the delivery hub for the US contract, have risen for the last eight weeks to a record 37 million barrels and those massive Cushing stocks appear getting still bigger. The specter of large crude oil inventories is haunting the markets much more than before, and has been instrumental in putting pressure on prices.

Earlier last week, the Paris-based International Energy Agency said that global oil demand this year was expected to rise 220,000 barrels a day less than it previously forecast. The IEA said the Greek debt crisis could dent oil consumption if it spreads to other countries such as Spain, Portugal and Italy.

In its latest monthly market report, OPEC too underlined that global demand for crude oil would grow by 1.12 percent, only 0.06 percentage points higher than the previous assessment. Reacting to an upward revision of the International Monetary Fund's positive economic forecast, the OPEC underlined that the global oil demand in actual will not grow in the line with the projected global economic growth. In April, the IMF predicted global economic growth of 4.2 percent in 2010, up from a January forecast of 3.9 percent.

OPEC analysts too did not expect the industrial sector to fully recover until the end of the year. In addition, OPEC underlined that the transportation sector could suffer if government stimulus plans run out and if petrol prices are too high. "Although the recent upward revision to GDP (gross domestic product) must be matched with oil demand, the increase in oil demand will be less as the factors mentioned above are likely to suppress it," the OPEC report said.

The OPEC held steady its forecast for modest growth in world oil demand this year, noting uncertainty about the global economic outlook. "Although the economic recovery shows signs of improving momentum, important risks remain that could impact demand growth expectations for this year," the Organization of Petroleum Exporting Countries said in its May report.

"The world oil demand forecast for 2010 will mostly depend" on the performance of the United States economy, the report said. "Should US oil demand weaken slightly and perform less than expected during the peak summer consumption season, then total world oil demand will be less than the current estimate."

OPEC said it was expecting world oil demand growth to grow by (only) 0.9 million barrels per day (bpd) or 1.1 percent to average 85.4 million bpd for 2010. That was almost unchanged from the previous report. "The more cautious sentiment about the continued pace of the recovery has also been reflected in oil price volatility," OPEC emphasized.

"This strong volatility came despite the fact that crude fundamentals remain relatively unchanged and thus highlight the continued impact of financial market sentiment on crude oil prices," it said, pointing to Greece as an uncertainty factor.

Uncertainty seems plaguing the crude world. Unanswered questions continue to haunt the energy dynamics. And this is the last thing the energy world could have asked for!