In the last four months, American crude oil has dropped to $80, from $107 per barrel. That has some oil investors worriedthere is more downside ahead.
However, Sam Margolin of Cowen and Company thinks calls for a production cut to keep oil prices up are premature. Instead, he sees crude as going through seasonal moves and may turn around soon enough.
"The supply/demand dynamics are not great, but certainly they don't justify the kind of panic that we're seeing," said Margolin to "Talking Numbers." He believes a reduction in U.S. output because of maintenance should take care of keeping supplies from building up.
"U.S. refinery utilization is down about 1.5 million barrels a day just on normal maintenance from the peak," Margolin said. "That is substantially more than OPEC could ever achieve from a production cut."
The recent return of Libyan oil to the market – at over 800,000 barrel per day – may have pressured prices but Margolin thinks it was merely a matter of timing that will work itself out in the near future. "It just so happened to coincide with normal seasonal patterns that would depress the price naturally," he said. "We see it as a confluence of coincidental events and not necessarily something secular that's going on."
Margolin says there is one way for investors to profit from his thesis. That's by buying companies that operate in the Bakken Shale.
(See: CNBC's Energy coverage)
"The weakest area for prices in the U.S. has been in the Bakken over the past three months," he said. "Prices at the Clearbrook, Minnesota hub, which is where about a fifth of Bakken production ends up in the pipeline, are about $74 a barrel. Depressed levels like that would cause most investors to question the economics of production there. [But] Bakken, just like any other region, is very seasonal."
"Any name levered to the Bakken on the exploration or production side we would see as a reversion candidate into winter," Margolin added.