Fear, of another kind, has enveloped the global energy markets. Gone are the days, at least for the time being, when geopolitics and the prospect of crisis in oil rich Middle East used to rule the markets, extracting a stiff fear premium of its own. Things have changed. Roles have been reversed. Fear premium is still there - yet in a diametrically opposing fashion. Increased anxiety about recession in Europe, economic slowdown in China, the surging North American production and the higher Saudi output all are staring at the markets. Demand destruction amidst higher output is the new fear gripping the markets. The worst is still to come - some assert. Prices fell Friday to a seven-month low in New York, with the benchmark contract heading for its longest losing streak in 5 1/2 years. Brent too dropped on Friday below $100 a barrel for the first time in almost eight months, to its lowest level since October 4 in London, as China's manufacturing grew at the weakest pace since December. In the meantime, the Saudi Arabian oil output too advanced to the highest level since 1989, according to a Bloomberg survey. US jobless claims rose and the country's crude stockpiles climbed by 2.21 million barrels in the week to May 25 - a 22-year high. China's PMI too is expanding at a slower pace for the first time in six months, confirming the sluggish state of economy, impacting the Chinese crude demand structure. Experts are concerned about a banking crisis in Europe that may pull countries that use the euro common currency into recession. Concerns mounted Wednesday, when the European Commission reported that economic confidence has plummeted to the lowest level in 2.5 years. The grim outlook was further compounded by sharply higher borrowing rates for Spain and Italy. The yield on Spain's 10-year bonds, a key indicator of market confidence in the country's ability to continue to make payments on its debt, shot as high as 6.69 percent, the highest since the euro currency was launched in 2002. And with softening demand and markets oversupplied, Dominic Schnider, the global head of commodity research at UBS AG's wealth-management unit, too sees WTI falling to $80 a barrel and Brent to $95. "The speculative interests are still high in oil. That makes it extremely vulnerable to further deterioration." "The current cocktail of crude stockbuilds, weak economic data from the world's major economies and an ever deepening sovereign debt crisis in Europe will be a strong force to overcome in the short term," Johannes Benigni, managing director at Vienna-based researcher JBC Energy GmbH, emphasized in a report. "We've completely removed the geopolitical risk factor and now the demand side has come back into focus. There is some nervousness we could see a deeper slowdown than what was expected," Ole Hansen, head of commodity strategy at Saxo Bank underlined.Fundamentals are in a driving seat. Despite gloom all around, about the stability of demand, OPEC oil output increased in May to the most since 2008 as the kingdom pumped at the fastest pace in at least 23 years, a Bloomberg survey showed last week. OPEC production gained 20,000 barrels to an average 31.595 million barrels a day in May from a revised 31.575 million in April, a survey of oil companies, producers and analysts said. Global oil supply is exceeding demand by 1.5 billion barrels a day, Aramco chief executive said last Thursday. The Kingdom is currently producing crude oil at a rate exceeding 10 million barrels of oil a day, Saudi Aramco CEO Khalid Al-Falih said in an interview with Dow Jones Newswires. We are in the midst of the long anticipated demand destruction. "We're seeing demand destruction across the board," says Jonathan Barratt, of Barratt's Bulletin. Crude oil is now in 'bear market' territory, having fallen more than 20 percent since February 24, and more seems imminent. Crude is in for still more battering! With the next OPEC ministerial scheduled in two weeks', the question hence circling all around is - will OPEC react to the melting markets? Will it cap its output? And if yes, when? The prevalent mood at the OPEC however indicates to the contrary. All may not be prepared to act at this very juncture. Only time will tell. __