There appears to be no stopping oil these days, with Brent oil futures marching past the $70 per barrel mark this week.
Crude is now some 150% above the levels it was trading at in early 2016, a low of $28 that was reached after oil entered a pronounced bear market.
Much of the strength in oil over recent trading sessions has been ascribed to a falling US dollar, as crude like other commodities is priced in dollars. As a result of greenback weakness, such commodities become cheaper in other currencies.
“The depreciation of the US dollar is allowing oil prices to make further gains. Almost every commodity class is being driven up by this extended dollar fall,” says Carsten Fritsch, an analyst at Commerzbank.
However, there´s been other factors at play in the sharp rise in oil prices over recent months.
Oil has climbed steadily since the middle of last year, with both demand and supply being perceived as more favourable for crude.
On the one hand, strengthening economic momentum in major economies such as the US, Europe, China and Japan naturally translates into firmer demand.
At the same time, OPEC and Russia have hailed continued progress in their targets to cut oil production.
In the autumn, OPEC and its partners agreed an extension to their output cuts. Recently, Saudi officials have also been talking up the prospects of extending the agreement yet again.
But where will oil go from here?
At 150%, the gain in oil prices since early 2016 sounds like an awful lot. However, it´s worth remembering that crude was trading as high as $115 per barrel in the middle of 2014.
That´s another 60% higher than the current price of $71 per barrel.
Some analysts, however, are claiming that the current bull market in oil looks long in the tooth on technical factors.
Carley Garner, a technical analyst and co-founder of DeCarley Trading, points to the latest Commodity Futures Trading Commission's Commitments of Traders report as providing evidence that the current rally may be about to run out of steam.
As of last week, investors were collectively holding the single largest long position in crude oil futures in history, some 666,000 net long contracts.
Some technical analysts point to this as a sign of overexuberance and scope for a big retracement in oil prices as the bullish positions get unwound.
Garner believes that a big sell-off in oil could be further exacerbated if the recent bearish run for the dollar also gets reversed.
On the fundamental side, however, the overall near-term signs for oil still appear good.
US crude inventories have been falling, indicating that global supply is continuing to rebalance following a glut in the market.
On Wednesday, official figures showed that US stockpiles had fallen for a record 10th consecutive week, to the lowest since February 2015.
At the same time, the longer-term fundamentals for the oil market do not stack up so well.
The outlook for long-term demand is being pressured by the switch towards electric cars and alternative energy sources, a major theme of 2017, as car makers and governments increasingly gravitate away from traditional combustion engines.
Meanwhile, on the supply side, there´s the rising exports of crude oil from North America to consider, with US shale producers increasingly emboldened by new technology that has allowed them to dramatically reduce their breakeven price level.
In a report last week, OPEC forecast non-OPEC supply to jump by around 1.2 million barrels a day during 2018.
According to OPEC, the market appears well supported this year; it also projects global demand for oil to grow by around 1.5 million barrels per day, more than offsetting the increase in non-OPEC supply driven by North American producers.
Given the rising North American production, investors may not have to wait until the revolution in electric cars fully takes off before oil sees a major leg down again.
Considering the higher output and export potential of the North American producers, from a fundamental perspective oil is likely to be extremely sensitive to any slowdown in the global economy over the coming years.
While from a technical standpoint the current bull market in oil may look shaky, it appears even more so from a longer-term fundamental perspective.
Indeed, the fundamentals also give cause for some caution in 2018.
“The upside is now limited for oil prices. US oil producers will ramp up production in the coming months,” says Fawad Razaqzada, a market analyst at Forex.com.
On the flip side, however, oil may yet find some support from geopolitical angst.
Last week, the market was helped by worries over the threat posed from attacks on Nigeria´s oil assets by militant group Niger Delta Avengers.
Any flare up of tensions in the Middle East could also be expected to prop up the market.
What´s pretty much certain is that there will be some excellent trading opportunities in crude over the coming months and years.