He said if oil breaks $42.03, the next target is in the upper $30s at about $36, and then $32. The question is how fast could oil spring back, if it does reach the lows set in 2008 and 2009 during the financial crisis.
"There's no positives on the supply side, and there's bearish fears on the demand side," McGillian said.
Read MoreOil collapse couldn't come at worse time for industry
OPEC on Tuesday upped its forecast of oil supply from nonmember countries in 2015. Oil prices have been more unpredictable because of the unknown factors around the impact on U.S. shale production, a relatively new phenomenon.
Production increased by about 600,000 barrels a day in the U.S. this year and has been holding steady at about 9.4 million barrels for several months. Typically, the shock of falling prices shakes out producers that find it difficult to fund operations, but the U.S. industry has kept drilling.
Oil's collapse has been rapid and outpaced the predictions of most Wall Street forecasters. One factor has been that the weaker prices are taking longer to impact U.S. shale producers than previously thought. OPEC has also been pumping more than it has in several years, and reported a 2.87 million barrel a day global oversupply in the second quarter.
At the same time, OPEC said its production rose to a three-year high this summer. OPEC said it pumped 31.5 million barrels a day in July, up 100,000 barrels on higher output from Iraq, Saudi Arabia and Angola. OPEC also said global demand growth should pick up in 2015 by 90,000 barrels a day.
In its monthly report Tuesday, OPEC raised its forecast for non-OPEC supply this year by about 90,000 barrels per day. OPEC also raised its estimate of 2015 world oil demand growth by 90,000 bpd, but due to rising supply expected from other producers, demand for OPEC crude remains at 29.23 million barrels per day.
Saudi Arabia told OPEC that it trimmed output by 200,000 barrels a day to 10.36 million barrels in July, after a record high in June.
"That's more seasonal. They're using less crude for their own power generation," said Kilduff of the Saudi cut. "They're getting their lunch eaten a little by the Russians and Iraqis in Asia." Saudi Arabia has reportedly slipped into second place exporter to Japan after falling from the top spot in both China and India.
Meanwhile, Iran was reported to have raised its oil production to 2.86 million barrels a day, the highest level since sanctions against the country were strengthened in June 2012.
Iran is supposed to wait for congressional approval of the nuclear deal before it moves to return its oil exports to world markets, but Kilduff said Iran could move sooner. Iran has an estimated 40 million barrels of oil stored in tankers, and Kilduff expects Iran to be aggressive in selling it.
"Over 2 million barrels of their floating storage is already gone. They're going to ramp up markedly. They want market share," he said.