Oil price has recently staged up above 50% rally, which for the first time in its 18 months rout has led to the bottoming question. While large investment banks such as Barclays, called the rally deviation from fundamentals and non-sustainable, International Energy Agency (IEA) said that price may have bottomed.

So, what the factors to watch out for, so that you know early which side will win the day?

• Since this rout was led by excess supply, rather than demand drop. It will be most important to watch over the supply. In supply, there are two types to watch – OPEC and non-OPEC. However some key members of both OPEC and non-OPEC are about to meet up this month on 17th, in Doha, to discuss and try to agree over a production freeze. This meeting will be joined by nations, which control about 65% of global supply. While most are likely to agree, while some may hold out led by Saudi Arabia from freeze unless Iran joins in. Iran is very much unlikely to join as its output is much lower than it used to be before sanctions. So Mark your calendars for April 17th.

Now comes the North American supply, which is non-OPEC and not controlled by state. So main factor here is self-adjustments to market pressure. Lower oil price has already been leading to bankruptcies in shale oil space and supply has dropped by at least 600 thousands barrels/day, but not enough compared to their supply increase of 5 million barrels /day from 2008 to 2014. Faster the drop here, faster will be recovery in oil price.

• Next key factor is demand increase, which was up at record pace of 1.6 million barrels/day last year but this year it is forecasted to be around 1.2 million barrels/day. However there are chances that due to higher demand from countries like India and China this number may overshoot, especially when oil price is low.

While supply/demand fundamentals prevail in the medium to long term, in the short there are factors that could influence price and do so all the time.

• Key force behind recent 50% rally has been speculative positioning, especially from hedge fund side, which from net short went to big time net long, which is once again fading after oil reached $41-42/barrel area. So watch for this speculative force in the short run, which is available in CFTC’s COT report, which we discuss every Monday at FxWirePro.

WTI is currently trading at $38.6/barrel and Brent at $2.1/barrel premium.