All eyes are on oil as the commodity settled down on Wednesday after the American Petroleum Institute reported an inventory build of 2.9 million barrels. Analysts had expected a decline.
In the wake of consistent bad news for oil, some investors have shied away from allocating their assets in the energy sector.
South Texas Money Management has rated energy stocks as underweight for about two years, considering that underlying economics are pointing to lower oil and some 80 percent of the world's oil supply is owned by a state directed economy, said the company's chief economist, Jim Kee.
"I think that's why markets are reacting in a negative way, anytime you see oil kind of free falling below $40 a barrel," investors can expect more volatility, he told CNBC's "Power Lunch" on Wednesday.
He expects conditions to remain volatile into 2016. "There's just a supply glut out there that would probably take at least six to 12 months to work off, regardless of what global demand might do," he noted.