Futures Now

Why betting on oil is tricky proposition: RBC commodity chief Croft

RBC strategist: Oil will grind higher
RBC strategist weighs in on OPEC deal
Gold hits two-month high

While OPEC's key oil producers have been adhering to December's output cut deal, which also included non-OPEC producers, strategist Helima Croft says investors shouldn't expect a big breakout in crude prices this year.

The head of commodities strategy at RBC Capital Markets says the main problem for the commodity remains "bloated inventories."

"That's why we don't think we're going to break out into the $60s or $70s anytime soon," Croft said Tuesday on CNBC's "Futures Now." "We're going to grind higher, [but] it's really the inventory that needs to be worked off to move much higher in terms of prices in the near term."

A note released by RBC Capital Markets last week noted that oil prices could hit $60, but that this 15 percent increase from current levels will likely not happen until the end of the year. The long-term price target reflects Croft's belief that because of oil's inventory excess, the commodity will be moving "pretty sideways" unless a major news story occurs.

"That's why I think this OPEC compliance meeting this weekend is important," said Croft. "If there is some negative headline coming out of that, that's a catalyst to have a sell-off."

OPEC members surprised many by agreeing to cut production of crude in December. But concerns that the cartel's second-biggest oil producer, Iraq, will adhere to the deal have left other countries nervous as to the agreement's future, according to Croft.

Even if the accord is adhered to, U.S. production could cap oil's gains.

"As a result of the increase in prices, we are going to see a substantial amount of oil pouring into the market from the United States," the International Energy Agency's executive director, Fatih Birol, told CNBC.