Oil prices are at risk of "cascading downwards" this year as analysts warn Brent's $70 a barrel value is unsustainable.
Speculative positions in the oil futures market have risen to an all time high, said Nitesh Shah, commodities strategist at ETF Securities, and pressure is starting to build on oil prices.
"Any small negative news around the oil market could see oil prices cascading downwards," Shah said.
Oil took a blow yesterday when the US Department of Energy said production in the US had topped the 10m barrel per day milestone for the first time since 1970, but prices rose back over $69 a barrel today after a survey showed the Organisation of the Petroleum Exporting Countries (Opec) still had a strong commitment to its supply cuts.
Fawad Razaqzada, technical analyst at Forex, said US production was likely to keep rising, heaping pressure on prices. "If oil prices have any chance of remaining elevated, the growth in demand for oil needs to outpace that of supply. This is unlikely in our view," he said.
Will Opec relax its supply cuts?
Henry Croft, a research analyst at Accendo Markets added to the bearish sentiment, saying prices may top out sooner rather than later.
He said Opec will have no incentive to prolong the supply cuts that have buoyed the market, with many ministers from Opec countries saying they are comfortable with oil prices in the range of $60 to $70.
As prices tend to fall in the first half of the year, Malcolm Graham-Wood, analyst at Hydrocarbon Capital, predicted that Opec may relax its output curbs sooner than expected if oil prices are still holding up in the $65 to $70 a barrel range by June.
Goldman Sachs today predicted that Brent will top that range this year as it raised its price forecasts on the oil market rebalancing six months sooner than expected.
Its three, six and twelve-month Brent oil price forecasts were raised to $75, $82.50 and $75 a barrel, respectively, from $62 previously.