"Back to Basics" for Crude, Says Kloza as Monday Sees More Market Losses

Another week in the price doldrums began on Monday with worry that the Organization of the Petroleum Exporting Countries (OPEC) may not extend its oil cutback initiative, which caused skittish traders to send West Texas Intermediate down 39 cents for a $49.23 per barrel close and Brent to fall 33 cents to $51.63.

And while experts debate to what extent the absence of a  cutback extension agreement is affecting the market, the man who correctly predicted crude's collapse three years ago has cut to the chase and declared that it's "back to the drawing board" for prices.

Tom Kloza, global head of energy analysis for the Oil Price Information Service, told CNBC that crude will trade in the upper end of the $40 range and ultimately remain in the low to mid $50s due to the impact of U.S. shale growth.

He added, "The people who are looking for $60 and $70 [per barrel], they have to realize something: we haven't actually had a month for WTI where it averaged in the $60s since September of 2009."

Kloza suggested that market watchers looking for oil to end up in the upper $60-$70 range in the intermediate term will have to "come back to earth."

Kloza conceded that stockpiles will drop every week during this and the following quarter and may improve prices, "but that's going to require a lot of patience"; however, he is more concerned that "too much gasoline and really a drop in U.S. demand in particular, but a little bit of softness in India and some other places, is going to lead to an undertow for refinery runs."

Meanwhile, with regards to last week's crude price drop of 7 percent, Tim Evans, energy futures specialist for Citi Futures, said in a note that his firm believes an OPEC cutback extension is likely, "but the market seems to be attributing last week's decline to the lack of a firm agreement.

"In our view, the drop had more to do with correcting the prior excess optimism and speculative excess than with any shift in the underlying fundamental scenario; but those requiring a fundamental explanation ... will focus on OPEC or U.S. production growth instead."

As for Monday's disappointing closes, Russia has also been identified as a contributing factor, with  officials in that country stating that their output could climb to the highest rate in 30 years if the OPEC extension is not ratified.

Capping the doldrums is overall distrust of OPEC and its allies: John Kilduff, founding partner of Again Capital, remarked, "There was a narrative that the OPEC/non-OPEC cuts would be effective and balance the market; the narrative unraveled by the end of the week."

Last week, Eugen Weinberg, head of commodities research at Commerzbank, was even more outspoken in his criticism of the cartel: he said, "OPEC is like a magician waving his hands and trying to pull the rabbit out of the hat, but still the rabbit isn't there; they've done all they can with the production cuts and the effect is close to non-existent."