Oil prices are at a 6-year low - and they're not going anywhere

Oil prices aren't going anywhere.

On Thursday, the price of West Texas Intermediate crude oil fell below $42 a barrel for the first time in over 6 years.

And as markets face the reality that there is simply too much oil and not enough demand to sop it up, prices aren't going anywhere.

In a note to clients on Friday morning, Societe Generale strategist Kit Juckes wrote that, "The eye-catchingly weak commodity [on Thursday] was oil, again."

Juckes added, "It's now clear to financial markets that tackling oversupply in a world with more modest demand growth, requires a more protracted undershoot in oil prices. The same could be said of the whole commodity complex."

Early Friday morning, WTI prices were off their overnight lows to trade at around $42.25 a barrel.

Earlier this week, the oil market was hit with 2 more pieces of bad news: OPEC - the 12-member oil cartel ostensibly led by Saudi Arabia - reported that oil output hit a 3-year high in July, while the International Energy Agency issued a report saying the market would remain oversupplied through 2016.

With a collapse below $42, WTI is now down more than 30% in just the last few months after a 50% rebound earlier this spring.

Earlier this week, we highlighted commentary from Jeff Gundlach, who said back in late 2014 that if oil fell to $40 a barrel something would be "very, very wrong" in the world.

Gundlach's commentary - which spoke more to the geopolitical rather than market implications of low oil prices - was re-circulated by traders and strategists this week as markets look for almost anything to use a guide post for what happens next with oil prices approaching their financial crisis nadir.

Goldman Sachs strategists have called the structure of the oil market "unprecedented," and the recent price action gives the market little reason to think this characterization will be proven wrong.