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John Kilduff: Crude's at a 'critical level,' but that isn't signaling a breakout

Crude saw its best weekly gain since July, but Again Capital founding partner John Kilduff says this doesn't mean you should pile into the commodity.

Despite promising technical indicators, there aren't too many factors that would help crude sustain its rally this week, Kilduff said Thursday on CNBC's "Futures Now."

"We're at a critical level. We're arguably at crossroads here in terms of [whether] we get an extended run higher," he said. "The odds, I think, are against it."

Oil rallied back to $50 a barrel on Friday, maintaining the momentum it had gained in the past week thanks to hurricanes Irma and Harvey. But Kilduff isn't too optimistic about the bounce.

"These are big daily price moves that in my view are always very vulnerable to retracement," he explained. "I think there's a lot of noise in the market, because of the hurricanes; there's a lot of trading that got done," and those trades are being unwound.

"So I think, for now, the rug could get pulled out from this rally quite easily."

Not only that, but Kilduff still sees U.S. oil production at highs and a possible fraying of the OPEC members' commitment to reducing crude production. Both would essentially aggravate crude's oversupply problem and drive prices lower.

Crude surged almost 4 percent last week, the commodity hitting highs unseen since the end of July.

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