As crude drops below $90 a barrel, investors should bet on a steep drop in the oil price, Citi strategist says

A busy hurricane season could have a bullish effect on oil prices. Photo by ANGELOS TZORTZINIS/AFP via Getty Images

• Expect steep drops in oil prices as demand for gasoline falls and supply rises, a Citi strategist said. 
• "The market is no longer expecting tightness ahead," Ed Morse told CNBC. 
• A busy hurricane season however is a major risk to markets and could lift prices back up.  

Crude oil dropped below $90 a barrel for the first time this week since Russia invaded Ukraine - and one top strategist warned bigger price drops are on the horizon. 

The drop in oil speaks to weakening gasoline demand in the US as recession fears mount, coupled with larger builds in US inventories that has elevated supply. 

Speaking to CNBC Thursday, Ed Morse, global head of commodities research at Citi said: "It means the market is no longer expecting tightness ahead, it's expecting things to loosen up. It's supply purely playing against demand," he said. 

More supply and less demand for oil typically means prices would fall. "This is something that needs to concern companies while it is something very pleasant for consumers," Morse said. 

Crude oil prices have largely been easing over the past month as the Federal Reserve's aggressive monetary policy pushes investors to fret over the possibility of the US economy falling into a recession. Such concerns have dampened gasoline demand among American consumers at a time when US inventories and OPEC leaders reported increases on the supply side. 

There could be shocks to supply however, as the US braces for a busy hurricane season, according to Morse. 

"It's the one major risk that lies ahead in the markets," he said, especially because the world is increasingly depending on US oil production as Western sanctions halt Russian supply as well as Russia cutting energy exports in retaliation to the aggression used against them for their war with Ukraine. 

Gas prices in turn could bounce back and oil prices could quickly rise above $120 a barrel, he added.