Crude continues its 2019 run. it was up more than 35% in Q1 and has started off Q2 with a $0.94 rally to $61.08. That’s the best level since November 12.

Technically, oil is now comfortably in the 50%-61.8% retracement zone of the Q4 rout. The next major level to watch is $61.69, which is the 200-day moving average. Beyond that it’s the 61.8% level at $63.71.

Fundamentally, I’m increasingly convinced that Saudi Arabia isn’t messing around. Exports to the US are dropping fast and inventories are tightening up. OPEC production in Feb was the lowest since 2015 in a 280K bped drop in the month. The cartel is now tracking at 135% of pledged cuts and Trump’s rhetoric doesn’t seem to be having any effect.

For me, it’s increasingly clear that Saudi Arabia felt burned by the Iran waivers and isn’t going to get burned again. They want to see Brent at at least $70 and as high as $80.