Oil has been one of the bigger winners as we kick off 2018, and is trading just off three-year highs

Has the rally in oil gone too far, too fast? Brent traded just above $70 per barrel at the start of the week, a psychological level in oil which is causing a little rethink in oil forecasts this year. Some analysts still believe that we'll still hug the $60 range, and WSJ looks at the risks that could potentially harm the optimistic start to the year in the oil market:

1. Geopolitics

While tensions in the Middle East has led to possible disruptions in oil supply (which is one of the supportive factors in the current rally), these geopolitical tensions will eventually subside - and oil prices could lose their immediate support. At the moment, there's a lot happening in Iran as well, but as the article says it's not going to last forever - though geopolitical tensions have always been faded very quickly in markets so this isn't the biggest of factors compared to the rest.

2. Crude demand

The article mentions that rising oil costs could hurt demand growth - particularly at the pump (consumers). Oil markets are heavily dependent on demand and supply talks (that's what make markets!) but I don't see global demand waning that much, not when a global growth is moving forward in such synchronised fashion.

3. OPEC discipline

This is one of the bigger factors that could influence prices. The issue here is compliance - especially in times when prices are rising. It wouldn't be surprising to see some producers "cut" corners and increase output to take advantage of the higher prices. I mean, we are talking about OPEC after all; their main concern has and always will be market share.

4. US drillers

One of (if not the biggest) the contributors to the downfall in oil prices in recent years. Higher prices will give more incentive for US shale producers to pump harder. That's going to add more to production and supply - which could bring us back to the same old story a couple of years ago.

5. Market speculators

OPEC's argument has always been "when prices rise, it's due to fundamentals" and "when prices fall, it's due to speculation". Well, whether or not they want to believe in it, bullish bets on oil has risen considerably in the second half of last year and has even surpassed that of the start of 2017 - according to data from ICE. So, the rally may have just gone too far, too fast and a retracement/correction here is very much a possibility.