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As crude gets crushed, traders play for $40 oil

Crude oil fell another 1.5 percent on Thursday, settling at $48.48, the lowest level since March 31. And some traders say even lower prices are ahead.

"This market is headed to $40 before we go to $60 again," said Bill Baruch, chief market strategist at Chicago-based iiTrader, citing reasons on both the supply and demand side of the equation.

In terms of demand, Baruch says the long-term picture looks bearish, with the International Energy Agency saying in a July report that global oil demand is set to slow in 2016.

"We have passed peak demand," he said.

And when it comes to supply, Iran could start exporting oil after a deal with the U.S., and Saudi Arabia "has shown a strong commitment to a production war," he wrote in an email to CNBC. "The second battle has essentially just begun."

Finally, long-term sentiment is not yet bearish enough, he said.

"Look for a consolidation pattern, and just above $50 is a key sell target against a downtrend line from mid-June."

Taking a deeper technical dive, Piper Jaffray analyst Craig Johnson notes that crude oil has recently failed a test of its own 200-day moving average. And with support at $50 violated, "we suspect a return to the '15 lows is underway," he wrote.

In March, crude fell below $42.85 per barrel.

Not everyone is bearish, of course.

"Right now, oil prices are in La-La-Land," said Steven Kopits of Princeton Energy Advisors. "I think investors have been watching the news and not the fundamentals. Current prices just aren't sustainable."

According to Kopits, "The only way you could keep oil prices at current levels is if U.S. shale producers can demonstrate growth in quantity at current prices, and I just don't believe that's true right now."

There could be "more of a downdraft" in the near term, he said, but "I see WTI north of $60 soon, and possibly north of $65."

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