The price of oil has been on a bullish trend since the start of the year. This is despite a steep decline at the end of last year because of a significant US shale industry output, which pushed down prices.
The prices have recovered at the start of this year because the market has bet that supply would tighten on the back of US sanctions against some of the biggest suppliers, notably Venezuela and Iran.
But, as we near the end of the first quarter, what is likely to shift prices and supplies through the rest of the year?
Throughout the first quarter of this year, Saudi Arabia has slashed production with a view to supporting prices. This is a position that was re-affirmed this week. In its monthly report, OPEC said that demand for its crude would average 30.46 million barrels per day, 130,000 less than forecast last month.
Given that the US continues to put its foot on the accelerator through shale gas, there is no sign in sight of this ending at any point. In fact, Saudi Arabia has already said that although the group is meeting again in April, that they do not expect for any further decisions to be made until June.
A state official for Saudi Aramco said on Monday that "[the country was] demonstrating extraordinary commitment to accelerating market rebalancing". That doesn't sound like someone who is planning to change course soon.
One of the reasons for the rise in the oil price over the start of the year, and a contributing factor to the fall in OPEC supply, has been the decline in production in Venezuela caused by sanctions as well as political instability in the country.
There was a sense in the market only a few weeks ago that the instability of supply in Venezuela might settle down, but it looks like impact is likely to be felt for months yet. Under US pressure, a number of countries are weening themselves off of Venezuelan oil, putting price pressure on suppliers elsewhere. In fact, as of this week, Reliance Industries, Venezuela's top customer in India, has capped oil purchases from the Latin American country.
Years of underinvestment in the oil industry under the control of government-controlled state oil companies has also meant that wells in Venezuela are unproductive, inefficient and not delivering at a level that they could be. Although the opposition has called for a return of foreign drillers, I do not expect that to come to pass any time soon.
The US has also had some success this year curbing oil exports out of Iran.
3. China and global demand
The oil market, as well as the other assets, have flexed over the start of the year in response to rumours and speculation about US-China trade talks.
In particular, prices fall in response to suggestions that the US and China may not be able to overcome their protracted trade arguments, leading to a downturn in the global economy and slowing demand for oil. Prices surge when a breakthrough is indicated.
For example, the oil price dipped at the start of the month when rumours circulated that the planned meeting between the presidents of the US and China would be pushed back until April from March?
What does the outlook like this? This is a political judgement, but if Trump is true to form, having followed trade negotiations over the last few years, while we should expect a white-knuckle ride for some months yet, we might expect a breakthrough at the end of the year, calming global fears and pushing up prices further.
It is also the case that Trump wants to see North Korea resolved before the end of the year for his own personal public reputation, and that will encourage him to meet China at the table on trade issues.
4. Technology and global weening off
Finally, while 2018 was a relatively poor year for environmentalists, with Trump deregulating the energy industry in the US and pulling from the Paris Climate Accord, there is an indication that global regulations on emissions and against fossil fuels could bite this year.
This shift is being led not by governments but by companies, who are under increasing pressure from consumers in the developed, but increasingly developing world, to cut emissions. The growing number of investors, including pension schemes, who have chosen to withdraw from oil stocks has also forced a number of companies to change their direction of travel.
For example, Bob Dudley, CEO of BP, said at the start of this month that "[BP] have to move from being pure-play oil and gas companies into broader energy businesses. Our focus has to be on developing an energy system that is cleaner, better and kinder to the planet."
This trend has been aided by entrepreneurs globally who have backed technology businesses which are effectively shifting consumers and businesses away from emission-producing activity, including ride-sharing apps, start-up investors that aim to make logistics and shipping more efficient, and non-oil-based plastic alternatives.
Overall, it is not clear the direction that the oil price will go in over the next 9 months, but at least three major trends will push the price higher: supply cuts from Saudi Arabia, sanctions in Venezuela and Iran, and possible resolution of global trade fears. We'll see how the year bears out.