LONDON - Oil prices barrelled higher this week to mark the fourth successive weekly gain, sparking talk that the commodities rout was over.

The price of iron ore also surged on Chinese demand hopes, further fuelling speculation of an end to the commodities selloff. However, analysts cautioned that the recent recovery could mark merely an upward blip on a broader downward trend.

“The recent moves in commodity markets are simply a correction of a very oversold market,” warned analyst Craig Erlam at trading firm Oanda.

“It is very natural for this to occur but does not indicate an end of the selloff just yet,” he told AFP.

“Fundamentally, very little has changed. We remain in a very oversupplied market.”

Goldman Sachs analysts argued in a research note that commodity prices were experiencing a “premature surge” that they believed was “not sustainable”.

“While we still believe oil will likely rebalance this year and create a deficit market by year-end, ‘green shoots’ of a deficit alone are not sufficient for a new sustainable bull market,” Goldman analysts wrote. “Only a real physical deficit can create a sustainable rally.”

Not out of woods yet

ANZ Bank analysts meanwhile declared that commodities from crude oil to copper were “showing signs” that the worst of the rout may be over. “Sentiment has picked up... This is not to say we are completely out of the woods,” they cautioned. This week, London Brent crude jumped Tuesday to $41.48 per barrel, the highest since December 9, 2015.

New York’s West Texas Intermediate (WTI) oil hit a similar peak at $39.02 on Friday, aided also by strengthening US gasoline consumption and easing output. The oil market has staged an impressive rally since January, when it collapsed close to 13-year lows on a chronic supply glut.

The recent upswing in prices prompted the International Energy Agency to declare Friday that the market may have “bottomed out”.

However, the IEA argued that there is a long way to go before oil supply and demand find a real balance, probably in 2017.

“International crude oil prices have recovered remarkably in recent weeks,” the IEA noted in its monthly market report.

“This should not, however, be taken as a definitive sign that the worst is necessarily over. Even so, there are signs that prices might have bottomed out.”

Back in January, Brent had tumbled to $27.10 and WTI to $26.05 in a heavy slump that was also rooted in worries of an impending global recession that would ravage demand. Sentiment has since been boosted by growing hopes of a producers’ oil output freeze deal and the brighter economic outlook.

Nevertheless, prices have still crashed by 60 percent since striking highs above $100 in mid-2014, plagued by stubborn oversupply, booming US shale output and the OPEC oil cartel’s refusal to curb record production.

Global recession fears dim

“People are not as concerned about an imminent global recession as they were at the start of the year when fear took over,” Erlam told AFP. “We were also overdue a correction in commodity markets following what was a remarkable sell-off over the last 18 months.

“The latter suggests these (upward) moves are likely to be temporary and further downside could come in the second quarter of the year,” he warned. Many commodities also extended their recovery after the European Central Bank delivered fresh economic stimulus on Thursday.

The dollar initially rallied against the euro after the stimulus and interest rate cuts, but then slumped after ECB chief Mario Draghi suggested more action was not planned.

Gold was catapulted on Friday to a 13-month peak at $1,285.18 per ounce, boosted by the weak greenback which stimulates demand for dollar-denominated raw materials.