The recent rally was fueled by a number of factors, including further drop in the US crude oil inventories, civil unrest in Iran, militant attacks in Libya, high compliance rate among OPEC+ members, and weak USD across the board.
Brent crude is now up by more than 10% from its December lows mainly due to political tensions in Iran. But the unrest hasn’t so far affected oil production itself in the country, so this optimism may be overestimated.
For now, the barrel looks overbought, and this is another argument for a local correction in prices which are a step away from the next major barrier at $70. The proximity to this level may scare off some bulls as well. Nevertheless, as long as the US stockpiles continue to drop, and there is a threat of supply disruptions, the potential moves will be limited, and the overall sentiment will remain upbeat.