Brent crude fell on Friday, heading for a drop of more than 10 percent this month and its biggest quarterly decline in five quarters, while analysts saw little scope for recovery this year.
ICE Brent for November settlement fell 80 cents, or 0.8 percent, to $103.15 a barrel by 1136 GMT. U.S. crude fell 97 cents at $81.17.
Brent is down 10.2 percent in September, set for the biggest such fall since May 2010. It is down 8.3 percent this quarter, its weakest performance since the second quarter of 2010.
The factors pressuring crude prices are unlikely to go away soon, analysts said.
"Demand is very poor in the Atlantic basin, prices are high, unemployment is high so we'd need to get greater confidence and a change in the employment picture to get a strong rebound," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
U.S. oil demand in July was much weaker than expected, posting its biggest decline in nearly two years, the Energy Information Administration said on Thursday.
Signs of weakness from China the world's second largest economy were also keeping investors nervous.
China's manufacturing sector contracted for a third consecutive month in September, a factor which, alongside doubts about Europe's ability to solve its debt crisis, helped to pressure riskier assets such as equities.
Supply disruptions in the North Sea including the Buzzard field and the fact that Libya's output was stopped by the war have helped keep a floor under prices, but analysts said these dynamics are likely to shift.
"Libya production is resuming fast, with ENI, Agoco, Total already restarting fields and Buzzard appears back to normal and Azerbaijan should remain close to current levels, and better supply will be confronted with very weak demand," Christophe Barret, analyst at Credit Lyonnaise Corporate and Investment Bank said.
Supply from all 12 members of the Organization of the Petroleum Exporting Countries is forecast to average 30.25 million barrels a day this month, up from 30.15 million in August, a Reuters survey of sources at oil companies, OPEC officials and analysts found.
Libya's output, which fell to almost nothing due to the civil war, has begun to recover, the survey found. It exported one small crude cargo on Sept. 25 and it is reported to be sending some oil to refineries.
"If the current positive reports from Libya are confirmed then domestic production could reach 1.3 million barrels per day by the end of next year," JP Morgan said in a note.
"On an annual average, this would lead to exports of around 0.6 mbd of light sweet crude, which together with rising Iraqi and non-OPEC output could lift supply by around 1.9 million bpd above today's levels."
Not all the political and economic news this week has been negative. U.S. weekly jobless benefits claims fell to a five-month low while revised data showed second-quarter GDP grew slightly more than expected.
Germany's parliament on Thursday overwhelmingly approved a plan agreed in July to expand the euro zone's bailout fund.
From a technical perspective, however, the outlook still looks very bearish, analysts who study charts of past price movements said.
The price of Brent is in a "death cross" where the 50-day moving average has crossed over the 200-day moving average, Michael Hewson, technical analyst at CMC Markets said.
"We're vulnerable to testing the $98 (per barrel) low on the 9th of August. The trend line from the lows in 2008 to the lows this year suggest that the next significant support will be around the $95 level," Hewson said.
