The recent gains of U.S. crude prices to $40 a barrel, a 50% spike since the commodity hit 13-year lows about two months ago, won’t last, oil expert John Kilduff told CNBC on Monday, predicting a price retraction ahead to the $25 level.
Benchmark West Texas Intermediate crude surged nearly 2.5% last week on the New York Mercantile Exchange, as Opec and non-Opec producers announced an April 17 meeting in Qatar to discuss an output freeze.
“I think it is going to be a buy-the-rumor, sell-the-news phenomenon to the extent they even do meet next month,” said Kilduff, noting that even with a freeze, the persistent glut, and lack of a production cutback sets up oil prices to fall back to their February lows.
Kilduff is basically saying that oil’s spike from its lows of $26.05 a barrel on Feb. 11 reflects a swing in sentiment but not a dramatic shift in the commodity’s fundamentals. An oil-output freeze would still have little impact on the global surplus.