Kilduff Trashes Reliability Of Any OPEC Freeze Deal, But Croft Puts Faith in Saudi's Conciliatory Tone

John Kilduff, founding partner of Again Capital

Fundamentals continued to trump sentiment on Wednesday as new data confirming a continued growth in U.S. oil supply caused WTI to settle at $46.77 per barrel, down from a recent peak of $48.75 – and as the freeze talks that have influenced trading so heavily of late draw closer, the speculation now is what prices will be when producers congregate in late September.

Edward Morse, head of global commodities research at Citigroup, predicts that Brent will average $47 per barrel in the third quarter and $50 l in the fourth quarter – and that the price could bottom around $40 during the refining maintenance season: "I think $40 is within reason, and I think it goes to $39.50 and the market goes long again."

Speaking with Bloomberg, Bob Michele, global CIO of JPMorgan Asset Management, rejected the idea from some analysts that the bottom will be in the $30s: "I think the Saudis and OPEC changed that dynamic," and he added, "It looks to us that oil can drop from here and settle at $42, $43, but it won't go much lower."

Megan Greene, managing director and chief economist for Manulife Asset Management, played her cards closer to her chest by stating to Bloomberg, "Oil will continue to be pretty volatile, particularly because it's being driven in large part by what's going on in the financial market these days."

It fell upon John Kilduff, founding partner of Again Capital, to predict what might happen if oil prices are considerably lower than now during the Organization of the Petroleum Exporting Countries Algeria meeting in late September:

For the record, the data that caused Wednesday's price drop showed that the U.S. experienced a build of 2.5 million barrels a day in the last week.

Still, despite a demonstrable history of OPEC members (primarily Saudi Arabia) repeatedly teasing that they will play ball only to reject any freeze proposals at the last minute and then increase production, some respected observers think that Algeria will be different.

Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC, in reference to the aftermath of the last meeting earlier this year, "I clearly saw there was a difference in the Saudi tone; Saudi was willing to convey that they care about OPEC, they care about the collective cartel."

Croft is convinced that Khalid al-Falih, the Saudis' new energy minister, will make good on the conciliatory tone he struck after his kingdom refused to freeze or reduce output in June.

While this new-found tone made for good headlines, it may not be enough to obfuscate the contention that the Saudis' oil strategy has caused  "the worst internal crisis in [OPEC's] 55-year history," according to John Defterios, emerging markets editor for CNN Money.