Record crude output from OPEC, a glut of refined products and signs of more drilling activity in the United States in the face of low oil prices have contributed to concern about excess supply.
U.S. drillers added oil rigs for a fourth consecutive week, data from oilfield services firm Baker Hughes showed Friday. The decline in U.S. output has been key to balancing a market weighed by excess supply for two years.
Kilduff predicts oil will fall to $35 per barrel. However, he's hoping to get more constructive on the industry next year.
Kent Moors, executive chairman of Energy Capital Research Group, is more optimistic. He believes the balance is coming; it's just been far more sluggish than many expected.
Right now, the market is being driven by the presumption of traders on what's to come rather than the oil that's on the market, he told "Power Lunch."
He thinks it's important to note that even though there has been an increase in drilling, once new wells come online, most will recover volume lost from capped wells. "This is not all automatically additional oil coming onto the market."
Plus, production levels in the United States are going to begin to decline again because the "oil debt crisis is about to explode."
"We have a number of companies that are drilling and producing like crazy just one step ahead of the sheriff. Give us another couple of months, that volume is going to be out of the market," Moors said.
Kilduff agrees the next downturn in oil prices will be "the knockout blow for a lot of companies, particularly here in the U.S."
He also thinks that it may even bring OPEC countries back into agreement with one another.
"They're going to say 'Let's get back together and let's reign production in,' because they may do the math on us and figure out that they can sell less oil for more money and make even more money than you do when you sell a lot of oil at a low price," said Kilduff.
— Reuters contributed to this report.