The forward-looking oil futures curve is positive along with U.S. supply trends, but a recent violation of price support and demand out of China raises questions of concern for oil bulls.

After oil witnessed strong gains recently, notably taking hold February 11, the market has more recently moved into a slight reversal phase. Looking at supply & demand fundamentals, as well as technical issues such as the shape of the Brent oil futures curve, Credit Suisse’s oil analyst doesn’t think the market will collapse, but then again he isn’t particularly constructive, either.

Oil is mixed picture

In commodity circles all eyes have been on the price of oil as a leading driver of economic activity. Various bank analysts, such as Barclays and have, at various times, predicted an end to the “supercycle” bear market in commodities, as has Deutsche Bank. Other bank reports, such as those from Goldman Sachs have predicted the recent commodity rally is a head fake. Even Barclays has apparently waffled on their previous analysis.

Enter Credit Suisse research analysts Jan Stuart, Johannes Van Der Tuin and Jonathan Aronson who survey the current market rally with weary if slightly bullish eyes.  “There is as yet too little real fundamentals support to expect markets to simply only rally,” they wrote in an April 6 report. “And there are still too many real question marks to be all-out confident that the supportive fundamentals trends will play out in time for summer” and peak oil usage during the summer driving season.

The chicken and the egg: which influences markets first, oil demand or supply?

Amid an overall challenging market environment, the Credit Suisse report is sanguine. While backward looking fundamental data has been “ugly,” and have “dented” existing positive trends, they have not derailed the trend.