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3 key reasons why oil has NOT bottomed yet: Oil analyst Kilduff

Sofia Pitt

Crude is poised to go lower, said oil expert John Kilduff, whose bearish calls on the commodity have been dead on.

"I don't see this market coming into balance until at least Q1 of 2017, if not later," Kilduff told CNBC's " Worldwide Exchange " on Friday, a day after the International Energy Agency said global oil markets are heading toward a long-awaited equilibrium.

OPEC on Friday warned oversupply still persists . The cartel meets again on June 2.

Since the Feb. 11 bottom, West Texas Intermediate (New York Mercantile Exchange: @CL.1) crude, the American benchmark, has surged about 70 percent. But WTI is still off more than 50 percent since June 2014 highs of around $114 per barrel.

While the market seems to be in a bullish mode right now, there are three bearish factors being ignored, according to Kilduff, founding partner of Again Capital.

First, he believes the dollar will continue to weigh on oil prices. "I think the currency headwind is going to emerge, there's no way the dollar can stay this low versus some of these major currencies going forward."

Oil is traded in dollars, so when the greenback moves higher it puts the squeeze on foreign buyers.

Second, Kilduff said trends in Asia support his theory that crude is headed lower.

"The big Achilles' heel here is Asia," he said. "The Asian demand center, which is key to the equation, [is] not looking good — China, Japan, South Korea, all of them [are] struggling mightily."

Third, the more obvious factor that will send prices lower is supply, said Kilduff. "We are still oversupplying the daily needs of the globe here by 1.5 million barrels [per day]."

As for the acute outages in several major oil-producing countries, Kilduff sees them as "easily fixable," referring to mechanical problems with a pipeline in Nigeria and closures related to wildfires in Canada's oil sands region.

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