Oil is always a fickle trade.

Over the weekend, crude oil rallied to a high of $72 on news the U.S., Britain and France launched airstrikes against Syrian storage, research and military targets, as President Trump sought to punish its leader over suspected chemical attacks.

Strikes only increased fear that the U.S. could be pulled deeper in a multi-sided Syrian war against Russian and Iran, thereby increasing the fear premium in oil price.

“Middle East tensions and geopolitical risk remain incredibly high suggesting the oil markets risk premiums will stay in check, as the global oil supplies remain vulnerable to any significant supply disruption,” said Stephen Innes, a senior trader with Oanda, as quoted by Market Watch.

Granted, oil prices do appear to be pulling back on the assumption that neither Russia nor Iran may retaliate at all after U.S. aggression, don’t count oil’s rally out just yet.

There are several reasons we believe the rally may have legs.

For one, driving season is quickly approaching in the U.S.

Summer driving season starts in April and ends in September with millions of cars hitting the road, as many head out on vacation. This results in increased gasoline consumption, forcing refineries to consume more oil to meet the demand.

Two, President Trump may reconsider a deal known as the Joint Comprehensive Plan of Action, which would end the current nuclear deal and potentially send oil prices higher.

According to Oil Price:

The nuclear deal, also known as the Joint Comprehensive Plan of Action, or JCPOA, “merely hit the pause button temporarily on those aspects of Iran’s nuclear program that it had already perfected — and, as [Salehi’s] threats underscore, could be easily restarted—while leaving Tehran with the time and space to develop technologies that it hadn’t perfected such as advanced centrifuges and missiles.  “Threats reveal what many deal skeptics have long argued: unless the JCPOA is fixed, Iran has pathways to dozens of nuclear-tipped missiles capable of striking U.S. forces, U.S. allies, and eventually the U.S. homeland.”

We also have to consider that OPEC oil production just fell by 70,000 barrels per day in February, and another 201,000 per day in March 2018, dropping overall production to 31.96 million barrels a day.

And we have to consider that demand is increasing, too.  In its April 2018 forecast, the EIA raised its projections for global demand growth to 1.85 million.

On the next pullback in crude oil prices, we’ll look to go long top names in the oil sector.