Crude not a pretty sight; yet to reach bottom: Bill O'Neill

Weak US economic data, an unexpected rise in crude inventory and contraction in China’s factory output fueled the slide in crude prices again. Overall, the picture looks bleak.

US crude futures steadied around USD 78 a barrel on Friday after sliding nearly 4% in the previous session to an eight-month low on weak economic data from China, the United States and the euro zone along with swelling crude oil supplies.
Bill O’Neill of Logic Advisers tells CNBC-TV18, there are a plethora of events taking place in the global economy that the technicals had signaled to them that crude prices would fall below USD 80 a barrel which it did.
While, yes, it is an additional breakdown it doesn’t look like its the bottom, according to him. “On the overall picture globally, which includes US, Europe, China and India as well with certainly some evidence of slowing and its not a pretty picture for crude oil demand,” he adds. Below is an edited transcript of his interview to CNBC-TV18. Watch the accompanying video for more. Q: We are seeing from a government point of view and an emerging market (EM) point of view some very mouth watering levels on crude prices there. For the crude market itself is this a big breakdown?
A: Yes it is. The plethora of events that are taking place certainly tell the tale and after the Federal Reserve made an extremely tame move although the consensus was expected, I think the tone was somewhat of a disappointment. Then you had the Bank of England (BoE) postponing what they are going to do, then you had the Chinese number and then you had this absolutely horrible run of US data today tickling the manufacturing sector, throw in continued high levels of production from OPEC and you have a weak picture.
 
Now the technicals had kind of signaled to us in our Logic Advisors daily comment last night, we had mentioned that prices are projected to go below USD 80 per barrel and certainly that occurred today. So, yes it is an additional breakdown but it doesn’t look like its the bottom to me because these events that are going on, we even had some positives today as related to the Spanish auction, US leading indicators weren’t all that horrible but people are ignoring the positives and focusing on the overall picture globally which includes US, Europe, China and India as well with certainly some evidence of slowing and its not a pretty picture for crude oil demand.