U.S. crude jumped higher for the third-straight day Tuesday, and the rally has some calling a bottom. However, Citi's Ed Morse told CNBC Tuesday he believes the commodity still has further to go to the downside.
In fact, he thinks the likelihood is "very great" that oil will hit a range in the $30s.
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"The world is oversupplied with oil, and we haven't seen the worst of it yet," he said in an interview with "Street Signs."
U.S. inventory numbers are growing at a pace of a million barrels a day, and there's no sign of its slowing down, said Morse, global head of commodities research for Citi. That, in turn, is causing storage space to run low, and oil prices will go down to accommodate finding more expensive storage, he said.
"Overwhelmingly prices are likely to go down before they really go up. This has been a series of head fakes in the market. Nothing is really sustainable on the reasoning on any of these moves upward."
U.S. crude surged 7 percent Tuesday. It closed up $3.48 at $53.05 a barrel, its highest settlement this year. It's up 19 percent in the past three days and 22 percent from its intraday low of $43.58 last Thursday.
The rally started after news on Friday that the number of U.S. oil drilling rigs fell another 94 in the week prior.
However, Morse, a former deputy assistant secretary of state for international energy policy, discounted the effect of those rig shutdowns on production.
"You've got to shut down significantly more rigs than we've shut down to get to the point where production is going to be stifled at all," he said, noting that the rigs that have closed are not the most productive ones.
If the market does run out of space to store its oil, Morse believes there is no reason there won't be a move to shut down U.S. production. He said that could send oil down into the $20s.
Meanwhile, energy stocks have also bounced on the oil rally. However, Art Hogan, chief market strategist at Wunderlich Securities, warned about jumping in too soon.
He too is wary that oil may have bottomed. While rig counts are down, the process to stem production "isn't like flipping a light switch," he told "Power Lunch."
"The supply response will happen. It just takes a while," Hogan said. "It may not be the last bottom we put in but it's certainly working in the right direction. Just be careful not to bite at that first bounce."
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Brian Belski, chief investment strategist with BMO Capital Markets, also isn't jumping into energy stocks at the moment.
"We have not given up on trying to pick the bottom in energy. People are consumed with trying to buy energy stocks," he said in an interview with "Street Signs."
"When we start to hear, 'I'm never buying another energy stock,' that's probably when you want to buy."