Forget $40—it's back to $25 oil: John Kilduff

Oil glut persists, I’m bearish: Kilduff

The recent march of U.S. crude prices to $40 per barrel won't last, oil expert John Kilduff said Monday, predicting another $25 environment ahead.

West Texas Intermediate crude surged 2.44 percent last week, its fifth-consecutive weekly gain, as OPEC producers announced a meeting in Qatar to discuss an output freeze.

"I think it's going to be a buy-the-rumor, sell-the-news phenomenon to the extent they even do meet next month," said Kilduff, the founding partner of Again Capital, an alternative investment manager specializing energy and metals.

"It's certainly going to disappoint the market," he told CNBC's "Worldwide Exchange," reasoning that even with a freeze the persistent glut and lack of a production cutback sets up oil prices to fall back to their February lows.

Kilduff said the April meeting isn't likely to bear fruit. He based his contention on Saudi Oil Minister Ali Al-Naimi's announcement in February that Saudi Arabia would not cut production because it did not trust other countries to do the same.

Production in Iran, meanwhile, continues to surge after sanctions were lifted in January. "They won't cooperate in the freeze deal until they get to pre-sanction levels."

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Regardless of a freeze deal, Kilduff underscored the importance of OPEC members and outside producers meeting to talk about it.

"Oil prices have rallied [nearly] 50 percent off their lows in eight weeks ... mostly on this freeze deal, which struck me as ridiculous almost," Kilduff said. "Just the fact that they're willing to cooperate to this mildest of degrees, you're seeing the bulls buy this market up."

A higher rig count announced on Friday, he said, doesn't necessarily have anything to do with the recent rally in prices.

"The rig count's at a low not seen since 2009, I'm not sure how many more rigs they can take out of service at this point," Kilduff said, adding that the oil market has priced in OPEC's upcoming meeting and the freeze deal.

Kilduff is also watching China's currency and markets. The forward currency market had priced in a yuan devaluation after the Chinese New Year, which didn't happen, he pointed out.

"That's what sparked this whole rally across the board," he said. "I think it also saved the bacon for U.S. oil prices and producers."