Beware of recent short squeeze oil rally: Kilduff

Oil prices slide after big move to upside

Oil expert John Kilduff, who's been correctly calling crude's plunge, said Tuesday the recent surge in prices won't continue.

Crude dropped more than 4 percent in early trading Tuesday, putting a dent in the more than 27 percent rally in the three previous sessions. Prices staged a major turnaround Monday, settling in New York up nearly 9 percent.

"This three-day rally rivals what we saw in 1990 with the Gulf War in terms of the price spike up," he said in a CNBC "Squawk Box" interview. "A lot of people were caught short and you saw massive buying."

"There's not a lot of support for this recent run-up," he said.

Kilduff founding partner of Again Capital, an alternative investment manager specializing in energy and metals, recently predicted further declines in U.S. crude to at least the low $30-per-barrel area. In a mid-August CNBC commentary, he wrote, "a trip down to the mid-$20s cannot be ruled out." U.S. oil prices made a recent bottom of $38 last month.

Kilduff was not all gloom and doom on Tuesday. He said he sees the "seeds of recovery" starting to emerge.

The economic slowdown in China and the excess in worldwide production continued to weigh on the market.

But he said he was encouraged somewhat by an OPEC statement that the cartel was willing to talk to other producers to achieve reasonable oil prices, as well as the downward revision of U.S. output data by the U.S. Energy Information Administration.

—Reuters contributed to this report.