US (BBN)-Extremely cheap oil is back, and it may get even cheaper.
Crude plunged 4% to as low as $42.85 a barrel on Monday.
That's the lowest price since March 2009 and marks the fifth consecutive day of losses, reports CNN.
This should bring smiles to the faces of the millions of American drivers who have watched gasoline prices creep higher in recent weeks.
A month ago, people were talking about an "oil comeback."
Now that looks like just a mirage.
More and more analysts predict prices of $40 or lower, at least in the near term.
"I think the market almost has to have a $30-handle on it before it gets this out of its system," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
That could cause gas prices to take another tumble, Kloza says, bringing the average US price back to around $2 a gallon.
It's currently at $2.42.
THE 'SMART MONEY' IS INVESTING IN OIL NOW
The world still has too much oil.
The supply glut that sparked the dramatic crash in crude from $100 a barrel last summer to under $50 in January remains.
Oil settled at $43.88 on Monday.
The key now is to see a pullback in production, but so far no one wants to budge.
OPEC hasn't scaled back production, and power player Saudi Arabia continues to say it has no intention to do so.
In the US, shale companies also continue to pump more and more oil.
While there are signs that the number of oil drilling rigs has fallen significantly in recent weeks, there's a lag before that drop in rigs really translates into less production.
"Shale production is not getting dented," says Kloza.
TOMORROW'S OIL PRICE? GUESSES RANGE FROM $20 TO $200
Strong dollar, weak oil: At the same time, the US dollar continues to skyrocket at an even faster pace than anyone expected.
One dollar is now nearly worth one euro, and Goldman Sachs thinks the euro could plunge to just 80 cents by the end of 2017.
A stronger greenback is bad for oil prices because the black stuff trades in dollars.
So when the dollar strengthens, it makes oil more expensive for foreign buyers whose own currencies are weaker.
One factor that could spark another round of selling is a nuclear deal with Iran that lifts sanctions on the country.
Allowing Iranian oil to flood the market would only exacerbate the ongoing supply glut.
THE DOLLAR IS CRUSHING OTHER CURRENCIES
While the oil slide has been going on for months, there are key thresholds that act as trigger points for the market.
Crude's collapse below $43.50 a barrel on Monday represents one of those points.
Barclays said that breach makes the bank more negative on oil and signals a further move below $40.
In other words, the selling is probably not done.
"It will overreact to the downside. There are an awful lot of smart people who think this market is on a rendezvous course with the December 2008 low of $32.40," says Kloza.
That level represents a modern day low, although it occurred under extremely different circumstances.
Back then oil was slammed by lack of demand as the world's largest economy was trying to rescue itself from a major financial crisis.
Today oil is falling because there is too much supply.
These prices probably won't last, experts say.
Oil is unlikely to average a low figure like today's $43 for all of this year or next.
But it's part of the recovery process.
"It's a little bit like a professional athlete tearing his meniscus. There is a lot of rehab needed," says Kloza.
SAUDI ARABIA: DON'T BLAME US FOR OIL'S BIG PLUNGE
Saudi Arabia isn't a fan of the "conspiracy theories" surrounding the kingdom's oil policies.
Oil took a massive plunge from over $100 a barrel in July to under $50 in January.
Saudi Arabia's refusal to cut production, especially when oil hit around $70 at thanksgiving, raised eyebrows about the country's motives.
In the past, Saudi Arabia would respond to a supply glut like the current one by pumping less oil.
Energy analysts began to speculate that the Saudis were trying to kill off the North American shale revolution.
Some shale operations are no longer profitable when oil falls below $50.
Theories claiming OPEC has a "war on shale" and that OPEC is dying are wrong, Saudi oil minister Ali al-Naimi said in a speech on Wednesday in Berlin.
"OPEC and Saudi Arabia have yet again been maliciously- and unfairly- criticized for what is, in reality, a market reaction," the powerful official said.
Al-Naimi said huge price swings often trigger a "frenzy of commentary ascribing various bizarre theories and motives -about collusion or conspiracy- to OPEC" and Saudi Arabia.
$2 Gas Is Gone- For Now
The fact that al-Naimi felt the need to respond underscores just how widespread the OPEC versus North American shale talk is.
Richard Fisher, the president of the Dallas Fed, recently said the Saudis "engineered" the price drop after the Middle Eastern nation belatedly woke up to just how big America's energy boom is.
Fisher also noted that the Saudis benefit from cheap oil because of the pain it inflicts on Iran, their chief rival in the region.
Even the Saudi oil minister acknowledged the country's goal of maintaining market share.
It didn't want a repeat of the 1980s when it lost ground by significantly cutting production.
"We will not make the same mistake again. Today, it is not the role of Saudi Arabia, or other certain OPEC nations, to subsidize higher cost producers by ceding market share," al-Naimi said.
OPEC, which was founded in 1960, is led by some of the most influential oil producing countries in the world, including Saudi Arabia, Qatar, Iran and the United Arab Emirates.
Edward Morse, a Citigroup oil expert who correctly predicted the 2008 crash, recently said the "end of OPEC" might be closer to reality now.
He pointed to the disruptive force of the US shale revolution, which has caused OPEC to lose its biggest customer (America) and diminished OPEC's ability to manipulate prices to its own advantage.
The US shale revolution has "created a sort of existential threat to Saudi Arabia and OPEC," Morse wrote.
It's clear that cheap oil is spooking at least some OPEC members as well as causing fractures within the cartel.
Nigeria's oil minister, who also serves as OPEC's president, recently warned that OPEC could hold an emergency meeting if prices don't rebound.
Nigeria needs oil prices of nearly $120 a barrel to balance its budget, according to Deutsche Bank.
But OPEC sources told CNN Saudi Arabia won't agree to hold an emergency meeting despite the pain being felt by some members of the cartel.
SAUDI PRINCE: OIL WILL NEVER RETURN TO $100
Eight months after the oil price began falling, the supply glut still exists.
Oil dropped back below $50 a barrel on Wednesday after new data revealed a huge increase in US crude supplies over the past week to all-time record highs.
Al-Naimi, whose speech was made public before the data was issued, doesn't sound worried about prices dropping further.
"History will prove that this was the correct path forward," he said.
"Demand is gradually rising, global economic growth seems more robust and the oil price is stabilizing."
BBN/SK/AD-17Mar15-4:20pm (BST)