In a significant market shift, oil prices experienced a sharp downturn on Thursday, influenced by a recent increase in U.S. crude inventories and growing apprehensions about China’s demand prospects.

The international benchmark, Brent crude, witnessed a 3.7% drop to $78.15 a barrel, while West Texas Intermediate crude saw a steeper fall of 4.1%, landing at $73.50 a barrel.

This decline was precipitated by a report from the Energy Information Administration on Wednesday, revealing a substantial jump in U.S. crude inventories. The 3.6 million barrel increase far exceeded the 1.8 million-barrel rise analysts had anticipated in a Reuters poll.

Compounding the issue is the steady output of U.S. oil production, maintaining a record pace of 13.2 million barrels a day.

China’s economic challenges are adding to the market’s unease. The country’s refining output dipped 2.8% in October, amounting to just 15.1 million barrels a day, as reported by China’s National Bureau of Statistics. This downturn in one of the world’s largest oil consumers is casting a shadow over the global demand outlook.

This recent slump in oil prices is a reversal from the late-summer rally, spurred by Saudi Arabia and Russia’s commitment to cut crude production through the year’s end.

Despite these moves by OPEC+ leaders to shore up prices, Saudi Arabia’s energy chief has expressed frustration with speculators who might be contributing to artificial price reductions in the energy market.

Yet, some Wall Street analysts remain optimistic about oil’s future. They point to a sustained trend of underinvestment in the industry, potentially leading to supply shortages down the line.

In this context, Goldman Sachs predicts a forthcoming “supercycle” for crude and other commodities. The financial giant forecasts a rebound for Brent prices, potentially reaching $100 a barrel in 2024.

For investors and market watchers, these developments underscore the volatile nature of the oil market, influenced by a complex interplay of inventory levels, production rates, and global economic factors. As the situation evolves, keeping an eye on these dynamics will be crucial for understanding broader energy market trends and investment opportunities.