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Update:

After touching $100 per barrel last Friday, oil prices have tumbled more than 8% and were heading lower again Thursday morning.

Several factors have been cited for the drop, including concerns about a mini 'flash crash' in the oil pits, and a pledge by Saudi Arabia to keep prices down.

But the real story is weak fundamentals with the "single biggest issue" being China's slowdown, according to Paul Sankey, oil analyst at Deutsche Bank.

"The demand side is what drives the price," he says, citing China's slowdown, Europe's economic weakness and slowing U.S. demand, due both to the macro economy and seasonal factors. Furthermore, Sankey notes crude prices have been falling despite the Fed's QE3 announcement, which is "clearly bullish for the price" of all dollar-denominated commodities, as well as the recent spate of unrest in the Middle East.

Thanks to the so-called shale revolution, Sankey predicts West Texas Intermediate, the U.S. benchmark, will continue falling into the low $70 per barrel range by the end of 2013. (Sankey believes the global benchmark, Brent Crude, will fall into the lows $90s vs. today's price near $109.)

While there's always a lag between oil and gas prices, Sankey believes U.S. consumers will eventually feel relief at the pump. In fact, he believes U.S. gasoline prices hit an all-time peak earlier this year and U.S. demand will fall by 50% in the next 20 years.

"The efficiency story is more dramatic than people realize," he says; the average car sold today 25% more fuel efficient than the one it's replacing. "Combined with cheap energy we now have from the unconventional revolution, there's every reason to be bullish on the U.S. economy and the future of the U.S. as major player globally."

While the pain at the pump consumers feel today is real, the reality is the U.S. is uniquely positioned and potentially on the road to energy independence (or something close to it), which has very bullish implications. (See: U.S. Policy Playing "Catch Up" to New Energy Realities, Yergin Says)

Earlier: After touching $100 a barrel last Friday, oil prices have fallen more than 7% in the last week.

West Texas Intermediate (WTI), the U.S. benchmark crude, is currently trading around $91 a barrel.

In the accompanying video, Deutsche Bank's oil analyst Paul Sankey tells us why oil prices have tanked in recent days and why he believes WTI crude will continue to fall to $72 a barrel by the end of 2013.

More to come...

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