Oil rally is transitory: Expert

Oil hits 2015 high

Despite oil prices hitting a 2015 high, global demand remains soft and higher prices are transitory, a Bank of America Merrill Lynch analyst said Wednesday.

"I think as we move into the September-October contracts, we are going to see some downward pressure again," said Francisco Blanch, the firm's head of commodities.

Data released earlier Wednesday by the Energy Department showed that U.S. supplies had fallen last week while demand ranged from flattish to slightly up. European demand was up.

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Floor hands make a pipe connection on the drill string on the Orion Perseus drilling rig near Encinal in Webb County, Texas.
Eddie Seal | Bloomberg | Getty Images

Blanch said the oil rally was "a mixed story," given the soft global demand.

"Demand in oil exporting countries has actually tanked because of the impending recession in Russia," Blanch said in an interview with CNBC's "Squawk on the Street."

Blanch also mentioned weak Latin American growth and the problems in the Middle East as impeding growth.

Lower prices have helped pushed demand a little higher but Blanch said that's transitory.

Blanch had predicted $31 for WTI by the end of the first quarter, compared with the current price of about $61.

"What frankly surprised us is the strength of the rebound in the second quarter more than anything else," he said. "We were expecting a rebound towards the end of the year, but certainly it's happened a little faster than anticipated. To me, that's been the real surprise—this constant uplift week after week on that inventory data coming out of the DOE."