However, analysts now warn that the market is "over-tightening": File Image/Pixabay
Oil continued its winning streak on Monday, due to the growing conviction in the trading community that the Organization of the Petroleum Exporting Countries (OPEC) will be able to thwart a much-feared global glut of inventory via its crude production cutbacks.
However, at least one analyst thinks that OPEC's initiatives and other factors could lead to an especially volatile second half of 2019.
Brent climbed a modest 16 cents to $66.41 per barrel, while West Texas Intermediate rose 47 cents to $56.04 per barrel - which contributed to oil rising nearly 25 percent so far this year and on course for its strongest first-quarter performance since 2011.
Vandana Hari, founder, Vanda Insights
All bets are off for the second half
And while the ongoing worries over the U.S./China trade dispute was said to have tempered Monday's gains, analysts are now abandoning debates revolving around the notion of excess oil and focusing increasingly on the prospect of a market tightening.
Tamas Varga, analyst for PVM Oil Associates, said, "There are lots of 'ifs' and 'buts' that could have a profound impact on oil prices; just think of the unpredictable Donald Trump, Brexit, trade talks, or an eventual pick-up in Libyan and/or Venezuelan production.
"Latest available data, however, point in the direction of a tightening market; it is not recommended to swim against the current and presently the 'oil' river is flowing north."
JBC Energy said in a note, "Our numbers ... do tell us that we are looking at the tightest H1 crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being."
The question of where oil prices could evolve from this point was addressed by Vandana Hari, founder of Vanda Insights, who told Bloomberg television that Saudi Arabia is going "way beyond what they have pledged to cut" and that it will amount to 1.3 million barrels per day below what they pumped in November, "so the Saudis are over-tightening the market once again."
She added that the over-tightening is more severe than what the Kingdom caused back in 2017 with the first round of OPEC cuts, and that other factors such as the loss of Iranian oil due to the U.S. sanctions "are starting to stack up" and could lead to prices in the $60-$70 range for the first half of this year - and potentially "huge swings" afterwards: "All bets are off for the second half."