U.S. crude rallied for a third consecutive day Monday, posting its best three-day gain in 25 years, but traders may not have seen the last of $30 oil, Anthony Grisanti, president of GRZ Energy, said.
"We went from being oversold to being overbought in a matter of three days," he told CNBC's "Closing Bell."
Benchmark West Texas Intermediate touched a 6 ½-year low of $37.75 last week before rallying higher as short sellers moved to cover positions after an initial bounce.
The October contract for U.S. crude settled 8.8 percent higher at $49.20 on Monday, fueled by government data that showed U.S. crude production declined in June and signs that OPEC may be willing to work with other producers to stabilize oil prices.
"Does this rally have legs?" Grisanti asked. "I'm not so sure about that because we still have a huge oversupply in crude oil around the world."
A sustained climb that brings U.S. crude back to $50 to $55 per barrel will spur U.S. shale oil drillers to bring new or idled production online, exasperating oversupply, Grisanti said. Unlike deep-water drilling, it take just a few weeks and a few million dollars to start up U.S. shale production, he said.