Traders should look for Saudi Arabia to jockey the oil market with comments about cutting production once crude prices fall below $44, RJO Futures senior markets strategist Phillip Streible said Wednesday.
Streible made his comments two days after a story in the OPEC Bulletin helped cap a three-day oil rally. The article suggested the producer group was open to working with nonmembers to curtail output, but an OPEC official on Tuesday said the organization had not changed its policy of maintaining current production levels.
According to Streible, OPEC and top oil exporter Saudi Arabia could change their tune if crude falls back into the low-$40 range.
"If you're basing your country's budget on oil prices—and it's not just the Saudis and OPEC, this is other South American countries, as well—they're going to collaborate together, and they're going to try to boost prices up," he told CNBC's "Squawk on the Street."
U.S. crude fell as much as 4 percent below $44 on Wednesday after government data showed crude stockpiles rose by 4.7 million barrels in the prior week. International benchmark Brent crude traded down more than 2 percent but held above $48 after touching a nearly 6½-year low of $42.23 last week.
Bond issues by Saudi Arabia's government are expected to be worth tens of billions of dollars by the end of 2015 as the state ramps up debt sales to plug a hole in finances created by low prices for oil exports.
In July, Riyadh sold its first sovereign bonds since 2007, a 15-billion riyal ($4 billion) issue, after years paying down its debt to some of the world's lowest levels.
The Saudi strategy of holding oil production steady to maintain market share and force U.S. producers to balance an oversupplied market has run out of steam, Streible said.
"The U.S. is extremely efficient on their production in oil. I think they're going to continue to get better, so you're going to see oil prices, in my opinion, work their way lower and close in on that $40 level," he said."
American drillers have driven down the break-even cost of producing oil through innovation and cost-cutting. U.S. oil production has only fallen slightly, to 9.3 million barrels per day in June from April's peak of 9.6 million barrels per day.
Meanwhile, the number of rigs in U.S. oil fields has collapsed by more than 50 percent in the last year.
"I think that $50 is just too high right now," Streible said. "At $50 you're going to start seeing the rig count start to go back up, and you're going to see production levels start to boost up."
—Reuters contributed to this story.