Oil analyst who called $40 crude sees lower prices

More downside for oil?
More downside for oil?

ClipperData's Matt Smith, who forecast oil prices would fall to $40 a barrel back in June, now says crude could drop even further.

Smith made his June call just after crude futures hit 2016 highs above $50. Last week, they fell as much as 20 percent from those peaks. On Monday U.S. crude briefly dipped below $40 a barrel, while internationally traded Brent crude traded below $43.

"I see it going lower from here," Smith told CNBC's "Squawk Box." "We have this glut here in the U.S. not only in crude but for products, as well. We're actually at record inventories for the two of those."

Stockpiles of refined products are brimming after demand proved insufficient to absorb all the gasoline that refiners churned out while crude prices were low.

Now, demand for crude is depressed as the market works through those record stocks of gasoline, just as the U.S. summer driving season winds down and refiners prepare to shut down facilities for fall maintenance.

The impact is showing up in the national average for a gallon of gasoline, which is sitting at $2.13, compared with $2.66 at this time last year.

Compounding the problem, China is reaching its crude storage limit, which Smith believes will cause a pullback in the country's demand for crude.

Additionally, he noted seaborne gasoline cargoes have been diverted from New York harbor because onshore facilities were too full to accept deliveries. Meanwhile, floating storage aboard tanker ships is at near records in Singapore.

"Essentially, Singapore is this parking lot, and a lot of those crude cargoes do not have buyers," he said.

Dollar driving oil

What to make of oil's fall
What to make of oil's fall

Ed Morse, Citi's global head of commodities research, said he believes a structural change is underway that "the bears in the market are not perceiving." As the supply ramp up of crude comes to an end, the structural transition is "likely to make this dip a lot more temporary than those who are shorting the market now believe it to be," he told CNBC's "Power Lunch" on Monday.

Morse predicted the market could see Brent priced at $50 by the end of year, and above $65 by the end of 2017.

Tamar Essner, energy director at Nasdaq Advisory Services, said Monday oil prices could easily trade to $39 or below on an intraday basis, but are likely to find a long-term floor at $40 a barrel.

While short positions — bets that oil futures will fall further — are nearly as high as they were in February, bullish net long positions haven't been cut as much, she told CNBC's "Squawk on the Street."

"That suggests the market is a lot more balanced today than it was back in February, so I think that we could have some upside as those shorts get covered," Essner said.

"There's less bearish sentiment than there was back then," Essner added.

Playing oil stocks
Playing oil stocks

Like Smith, Essner predicted the highs of June would not hold. At the time she said the rally was being fueled by temporary production outages, and that supply concern would eventually return to drag prices back down.

But on Monday, she said another factor is most responsible for undercutting crude prices in recent days: the U.S. dollar.

"In recent days, oil has been a little bit more of a victim to broader rotations of capital in different asset classes," Essner said.

To be sure, the dollar has surrendered gains after initially rising following Britain's vote to leave the European Union. But Essner noted that investors have continuously built long positions in the dollar while shorting the British pound and euro.

A stronger greenback makes dollar-denominated crude oil more expensive to holders of other currencies.

— CNBC's Jackie DeAngelis contributed to this story.