Forget rally, oil heading lower: Analyst

Drilling rig count in focus
Drilling rig count in focus   

Oil prices have rebounded recently, but analyst Michael Cohen doesn't think the rally will last. He's predicting prices will likely head back down.

"The market has been very focused on the rig count," the head of energy research commodities for Barclays said in an interview with "Squawk on the Street."

"What we saw in the last couple weeks is rig count falling pretty precipitously by about 80 or 90 rigs per week, but we think there are more important things to be focused on and that rig count doesn't tell the whole story."

He expects to see some weakness going into the shoulder season for demand. In addition, there is an excess supply of about a million barrels of oil a day, he said.

"We have to incentivize further storage through the course of this first half of the year. In order to do that, we expect that the front-month contracts are likely to weaken."

A man at a gas station in Dellwood, Mo.
Getty Images
A man at a gas station in Dellwood, Mo.

Oil rose for a third straight session on Monday after OPEC projected less supply from countries outside the organization and forecast greater demand for crude this year. U.S. crude futures were up $1.53, almost 3 percent, at $53.22 per barrel late in the morning. Benchmark Brent futures rose 67 cents, or 1 percent, to $58.47, after revisiting Friday's one-week peak of $59.06.

Read More OPEC: 'Overflowing' supply weighing on oil prices

Last week, the market rallied on news that the U.S. oil rig count was at a three-year low. The count was down 87 rigs from the week prior, and down 315 from last year, according to the oil services Baker Hughes.

However, Cohen noted that just because the rig count is down doesn't necessarily mean that production is cut.

In fact, drilling productivity is expected to increase over the course of this year, he said. In addition, there is a lag between the time that you drill a well and the time that you connect it.

For example, rig counts dropped by over 600 in Texas in 2008-2009, but production only fell 50,000 barrels per day in the Lone Star State during that period.

"There's a wave of production growth that we still see producers enjoying from the time when prices were $100 a barrel."

Read MoreWhere are oil prices headed?

—Reuters contributed to this report.