Oil prices have erased their longest rally in 2016 for two main reasons. There are new indications that China's industrial activity is slowing, threatening to impact oil demand. Though not a "market fundamental" (as supply and demand are), fretting over the impact of China's economic slowdown has been affecting oil prices since last August.
The specific China data today? The country's purchasing managers index fell last month to a three-year low, and, as Bloomberg reported, the official factory gauge signaled contraction for a record sixth month.
The second reason why prices have fallen again is waning expectations that OPEC and non-OPEC producers will agree coordinated actions to address the price rout. After Russia put out this "feeler" late last week, Saudi and several Gulf state delegates denied that a meeting to discuss joint action was being planned.
The specific OPEC data today? OPEC oil production increased to 33.11 M/bd in January last month, Bloomberg data showed. This very clearly shows that the 13-member group's market share defense strategy is its MO.
And here's a look at prices as of midday U.S. time:
WTI fell $2.04, or 6.1%, to $31.58/bbl at 1:08 p.m. EST. Last week, futures rose 4.4% last week. Brent fell $1.86, or 5.2%, to $34.13/bbl. On Friday, the March contract expired after advancing 2.5% to $34.74/bbl.
chart: bloomberg
So as we begin February, the fundamentals haven't changed. That's why prices remain volatile. Volatile words are only moving prices briefly. Once the splash settled the "new low, volatile normal" set in.