Despite Slight Uptick, Analyst Bearish On Oil

Craig Erlam was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Brent crude prices will see $40 a barrel before they see $100, an analyst told Benzinga Thursday.

"I'm not bullish in the slightest on oil," Craig Erlam, senior market analyst at Oanda said.

Brent gained 1.3 percent ahead of the Memorial Day summer driving kick-off to $65.84 a barrel around mid-day Thursday on ICE Futures Europe.

Prices had rallied by about 30 percent from a bottom of around $43 a barrel two months ago, although the increase stalled earlier this month.

But Erlam, whose company provides Internet-based foreign exchange trading and currency information services, expects Brent will be range-bound at between $62 and $72 a barrel "until the fundamental outlook changes."

And the most likely changes could bring prices back down, in Erlam's view.

"I do think OPEC may increase output, and we may see Iran increase output once the sanctions are lifted," Erlam said.

"I think $70, $72 on Brent crude, it's not going to go beyond that," according to Erlam. "If anything I think we're going to touch $40 before we touch $100."

Erlam also predicted consolidation in the North American shale sector, with its costly production methods.

"Shale is an immature industry and now that they've got access to these wells they've got to find efficiencies," Erlam said.

"Already we've seen some mergers and acquisitions trying to drive these efficiencies," he added.