Brent Crude slid to $US53.44/bbl and the all-important regional TAPIS benchmark used by Australian producers looks like it will continue its downward movement testing $57/bbl, with an oil glut of more than one million barrels of oil per day.
The Organisation of the Petroleum Exporting Countries is warning of an oil glut, which is news to no one who watches the markets, with oil now oversupplied by almost one million barrels of oil per day, and US storage facilities such as the massive Cushing tank farm full to the brim.
It looks like the oil bears are set to run rampant for the rest of the year and there is no price relief in sight for oil producers as OPEC keeps the pressure on, even during the so-called US driving season, when American families pack up the car and head off on holiday and burn as much fuel as possible.
Oil prices have dropped about 60% since June last year on mounting US supplies, weak global economic growth and the decision of both OPEC and US producers to keep output high despite falling prices.
While the US rig count has dropped by almost a third this year the prediction is that US oil output will still grow by almost 250,000 barrels a day by the end of the year.
OPEC is reluctant to intervene to prop up prices, even though some members, including Nigeria and Venezuela, would like to see cuts as their economies suffer due to the loss of income from lower oil prices.
Russia, which is not in the cartel, is also hurting and stands to lose an estimated $180 billion this year off its 2014 income, due to the halved oil price and sanctions imposed over its activities in Ukraine.
OPEC forecasts that demand for its crude will average about 29.2MMbopd in 2015, about 800,000bopd less than OPEC said it was producing in February.
OPEC pumps about 40% of the world's oil, and Saudi Arabia is its biggest producer.
By year's end oversupply could be 2MMbopd.
With American production now at 4MMbopd the US is now considered to have taken the title of swing producer from OPEX, but many experts say the system cannot continue as it is.
Low prices will eventually knock higher cost US production offline from shale formations and tight oil zones, and reduce investment in new areas, but that is unlikely to happen before 2016.
Worse, once US unconventional production is reduced it will still be sitting there on the sidelines, waiting for prices to rise before the taps are switched on, the market is flooded again and the price wars begin again.
OPEC's monthly report says that a typical shale well can fall by 60% per annum and, with the decline in US rig activity, it expects production will taper off towards the end of the year.
That means the Gulf nations' strategy of forcing US oil out of the market is working, and so OPEC is likely to keep the screws tight though its next meeting in June.
Of course, Saudi Arabia denies it is engaged in a price war with anyone.
