Oil traders can agree on only one thing about when the second-biggest price rout on record will be over: not yet.

Crude oil’s freefall from more than $100 a barrel last summer to a near six-year low under $50 a barrel has been unrelenting, shocking traders and baffling analysts who have all but given up trying to pinpoint the bottom of the market.

The scale of the uncertainty reflects a market stripped of a core belief that has underpinned prices for the past decade: that top oil exporter Saudi Arabia would always ride to the rescue.

Ever since the Kingdom pivoted late last year to defending its market share rather than a near-$100 oil price, traders have been scrambling to search for other indicators that might suggest the stunning slide is over.

Time and again in recent months, traders have sought to identify levels that might mark a bottom, or bet that the Organization of the Petroleum Exporting Countries’ resolve to do nothing would eventually crumble, forcing supply curbs.

But with no sign of the cartel bending, each pause has been followed by a new wave of selling. Most traders now appear to have either given up, or are riding the frenzy lower.

“I’ve been scared and amazed by what is happening – oil has been falling without any technical rebound for the last six months,” said one futures and options trader in London. “There is no reason to define a bottom under those circumstances.“

With the US shale revolution still pumping out near record volumes, the debate over which producers will be the first to slash output has intensified as prices sink below costs, demand erodes and the global surplus grows.

“While oil supply growth will be less than it would have been at higher price levels, we are not confident making artificial calls on a market bottom,” ex-Goldman trader Jonathan Goldberg said in a letter to investors in his hedge fund, BBL.

Some are suggesting prices could fall lower than the levels of the financial crisis seven years ago – when US crude plummeted from nearly $150 a barrel to a low of $32.40 – as everyone waits to see which producers blink first.

“How low can oil go?” asked analysts at BofA Merrill Lynch Global Research this week. After 12 pages of explanations, analysis, charts and caveats, they posit a possible answer: $35 for US crude, and as low as $40 a barrel for Brent. Research firm PIRA Energy say it is “too early to get long”.

A worker fills the tank of a car at a gas station in Singapore. World markets have felt the effect of falling oil prices, but traders have stopped trying to bet how low prices can fall. Photograph: Then Chih Wey/Then Chih Wey/Xinhua Press/Corbis

Reaching for the knife

In 2008, during oil’s biggest ever crash, prices plunged 80% in less than six months as demand growth came to a halt. The turning point came in early 2009 when Saudi Arabia led Opec in big output cuts to shore up the market. By the end of 2009, prices were closer to $80 a barrel.

This time, with no sign of an Opec cut, dealers looked first to the cost of drilling US shale wells, estimated at as high as $70 a barrel, as a potential trigger for a reversal. But with shale output still growing and many producers having locked in higher prices for the next 12 months, that floor disappeared.

Brent at $60 a barrel then emerged as a compelling level and a nice round number, bolstered by early suggestions that that might be the line in the sand for Saudi Arabia.

But the selling continued, pushing below that level shortly after Saudi Arabia’s powerful oil minister, Ali al-Naimi, said the Kingdom would not cut output at any price.

“Everyone expected the week before Christmas around $60 a barrel to be the bottom,” said Abhijit Selukar, a crude oil futures trader in India, adding colder weather in the northern hemisphere would normally support the market in January.

As the oil market’s falling knife sliced through more and more traders who attempted to catch it, gallows humor emerged: What’s the difference between an oil trader who picks bottoms and a pizza? A pizza can feed a family of four.

Guessing game

Even so, traders and analysts continue to hunt for clues that might signal a rebound, or at least an end to the rout.

Some are still scrutinizing US oil production economics, but with short-term costs of $10 or $20 a barrel “it is perfectly conceivable that oil prices could fall further”, said Capital Economics’ head of commodities research, Julian Jessop.

Others like Daniel Bathe, portfolio manager at Lupus Alpha Commodity Invest Fund, are watching the forward price curve. The oil market is now in contango, with prompt prices cheaper than longer-dated futures, encouraging companies to store oil. Once that contango stabilizes, oil may find a floor.

A few may even be waiting for signs that producers outside Opec are ready to start cutting their own output voluntarily, although any such measures will likely be greeted skeptically.

But for many, however, it is a game of waiting and watching for a period of stability that may suggest the worst is over.

“I’ll tell you two weeks after it happens,” said one New York-based trader.

