$50 oil won't last long: Kilduff

Crude oil rallies

Oil flirted with the $50 mark Thursday as production outages brought some recovery to an oversupplied market. But John Kilduff, partner at Again Capital, says the crude rally is temporary.

"I'm still not that constructive on it," Kilduff told CNBC's "Power Lunch" on Thursday. "I think some of these outages that have driven the latest leg of the price move are transitory."

Brent crude oil, the global benchmark, rose as high as $50.51 a barrel in intraday trading Thursday, and has gained more than 30 percent since its 13-year low in February.

A key driver of the rally has unplanned oil supply outages, which hit their highest level in five years at an estimated 3.5 million barrels per day, Kilduff said. Wildfires in Canada this May contributed to an estimated 1 million barrels per day, while Nigeria had about 300,000, according to U.S. Energy Information Administration data.

Outages certainly draw down the global oversupply but Kilduff said he doesn't see the "demand side of the situation" ticking up without Asia.

"A lot of folks are saying that China is importing a lot of oil, which they are, but they're processing it into refined products," he said. "What was a crude glut is now morphing into a diesel fuel glut in Asia in particular."

A floorhand works on an oil rig in the Bakken shale formation outside Watford City, North Dakota.
Shale oil industry a 'Ponzi scheme' or can it boom again?
Traders work on the floor of the New York Stock Exchange.
Nasdaq ekes out 3-day winning streak ahead of Yellen
The Eagle Ford crude oil tanker sails out of the the NuStar Energy dock at the Port of Corpus Christi in Corpus Christi, Texas.
This oil industry player is benefiting from lower oil prices

A potential dollar rally as the Fed looks to hike interest rates could also drag down oil prices, Kilduff said.

Matt Sallee, portfolio manager at Tortoise Capital, with $14.1 billion in assets under management, is on the other, more bullish side of the oil trade.

"Oil's really just starting to gain some momentum here in spite of the U.S. dollar strengthening," Sallee said. He cited production declines in the U.S., down 80 percent year over year, he said. "We're not going to be producing enough crude to meet growing demand, and we're starting to see that now."

More oil upside ahead: Pro

Mike Kelly, Seaport Global Securities managing director and senior analyst, cited two basins gaining meaningfully across the U.S: the Permian Basin and the Stack area in Oklahoma, which he recommended as the best emerging play.

The $50 dollar a barrel environment was a "nice surprise," Kelly said.

"You're gonna start seeing growth. The volumes are going to turn up here as you cross $50 dollars," he said.