Bank of America Merrill Lynch analysts have indicated that Brent crude oil prices may be forming a double bottom pattern, paving the way to reach $112 per barrel...

The global oil market has shifted from calm to active in just a few weeks, with Brent crude oil prices breaking through the key threshold of $90 per barrel, and several key indicators continue to send out more optimistic market signals.

The surge in Brent crude oil prices (up 18% this year) is driven by supply constraints (including OPEC+ production cuts), strong demand, and broader geopolitical risks (especially in the Middle East). Many refined oil markets are also strong, with significant increases in gasoline prices.

As traders weigh the possibility of Brent crude oil prices returning to $100 per barrel, the following indicators paint a more optimistic picture for a bull market:

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Technical signals

After breaking through a narrow range at the beginning of the year, the technical side of Brent crude oil appears more solid. On Thursday, for the first time since August last year, the 50-day moving average of Brent crude oil broke through the 200-day moving average, a breakthrough that could trigger more buying from trend-following funds. In addition, Bank of America Merrill Lynch analyst Paul Cian wrote in a report that Brent crude oil prices may be forming a double bottom pattern, paving the way to reach $112 per barrel.

Brent crude oil option prices and trading volume

As geopolitical tensions escalate, especially after Iran vowed to take retaliatory action following an Israeli airstrike that killed an Iranian general, the tone of the Brent crude oil options market has become stronger. Brent crude oil call options are rarely priced higher than put options, and the trading volume of call options has surged.

Hartree Partners Senior Advisor Ed Morse said in an interview, "What supports the breakthrough rise in Brent crude oil prices is the financial market. As tensions in the Middle East intensify, the bullish buying of Brent crude oil will definitely increase."

Spread wideningThe shape of the Brent oil futures curve currently points to a strong market. The spread between the two nearest December contracts has returned to its largest value since last October, representing a strengthened confidence in supply tightness. The resilience of the U.S. benchmark WTI crude oil price also supports this, with its spot prices recently commanding a significant premium over forward prices.

Fund Purchases

As technical indicators improve, fund managers are flocking to the oil market, with Brent crude holdings reaching their highest level in over a year, while U.S. oil holdings have reached their highest level in about five months.

ETF Inflows

Against the backdrop of persistently high U.S. inflation indicators, funds flowing into the commodity market have turned positive for the first time in months, with commodity ETFs welcoming their first net inflow of funds in five months in March.

Refining Profits

As crude oil prices rise, traders are increasingly focusing on the profits that refineries make from converting crude oil into fuel. Gasoline has been outstanding in the past few months, with its benchmark futures price rising by about 33% this year, while refining profits are also above the seasonal average.