OPEC is widely expected to extend production cuts that initially boosted oil futures above $50, but prices just keep falling.
That raises concerns that oil prices could struggle to return to their 2017 highs in the mid and upper $50s even if the Organization of the Petroleum Exporting Countries carries over the output reductions through the second half 2017 when it meets in three weeks.
That announcement could boost prices by $2 or $3 a barrel, said John Kilduff, founding partner at energy hedge fund Again Capital.
But that would leave a lot of ground to cover. Thursday's sell-off sent U.S. crude prices below $46 a barrel, while Brent futures slumped to under $49. Those levels have not seen since Nov. 30, when OPEC agreed to slash output by 1.2 million barrels a day in a bid to shrink huge stockpiles around the world.
U.S. West Texas Intermediate crude oil 3-day performance
Early losses fueled by technical selling accelerated after OPEC sources told Reuters that the cartel was unlikely to make cuts deeper. Some believe that is necessary because U.S. drillers have taken advantage of this year's higher prices to increase production, while OPEC members Libya and Nigeria, both exempt from the deal, have raised output more than anticipated.
Despite historically high compliance to production quotas, the world's storage tanks are still brimming.
This week, a Reuters survey indicated that OPEC's April compliance remained above 90 percent, but had slipped from the previous month. That shows compliance "is as good as it's going to get for them, and it's still not working," said Kilduff.
"People keep forecasting that global inventories are going to come down, but so far, they haven't for the most part," he said.
U.S. crude stockpiles have fallen in the last four weeks, but remain near an all-time high set in March. Meanwhile, inventories in developed countries were 336 million barrels above the five-year average in February, the International Energy Agency said in its latest report.