Oil prices reached their highest level in three weeks on Thursday, but this brief rally is set to fade, according to one analyst.

When asked if $30 a barrel was a reasonable bottom for oil as the closely watched commodity reached almost $34 on Thursday, Craig Erlam, senior market analyst at Oanda, based in London, said he thinks prices are actually headed lower.

"I think the bottom is going to be more like the low $20s," he said. "I think we're seeing a temporary correction at this moment, maybe back towards the high $30s. But I do think further downside is on the table."

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Crude prices rose this week on news of a possible deal between Saudi Arabia and Russia to cut production. A Reuters report concerning the talks between the two nations said that the Saudis were proposing a plan under which  oil   production would be cut globally by 5%.

Crude oil prices have fallen almost 15% since the start of the year and are down 41% over the past 12 months. The S&P 500's 7.3% year-to-date decline is largely blamed on that recent plunge.

However, lower crude is also a drag on inflation. Notably absent from the Federal Reserve'sJanuary statement was any mention of the FOMC being "reasonably confident" that inflation would move back up toward its 2% target over the medium term -- a comment that was included in its December statement.

"The Fed mentioned the global financial and economic conditions, which have hampered the markets at the start of the year," Erlam said, adding that this reference gives the FOMC more wiggle room to change policy down the road and potentially shift away from its plan, outlined in December, of four rate hikes for 2016. "Say they get to June and they haven't raised rates again, the Fed can turn around and say, 'We were monitoring these conditions and they've deteriorated further.'"

While Erlam said the Fed appealed to both the doves and the hawks in its statement, they haven't been deterred by the volatility in the markets as of yet.