Benchmark crude oil prices will likely rise this week as global supply threats build and markets price in a positive outcome to Greek debt talks, CNBC's weekly survey showed.
Seven of this week's sample group of eight respondents expect oil prices to climb, while one forecasts prices to remain unchanged.
Compass Global Markets' Peter Turville-Ince has a bullish call on oil this week and expects $120 "very soon in the WTI space" though momentum in Brent crude should "start to slow and should be limited towards $125/$127 for now."
Asian stocks markets rose on Monday reflecting optimism that Greece will seal a deal on a second bailout at a meeting with Euro zone officials later today.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro program, including a debt sustainability analysis critical to the IMF, Reuters reported.
While there is still skepticism in some countries that Greece will be able to live up to its commitments - including implementing 3.3 billion euros of spending cuts and tax increases - officials said momentum was behind approving the deal and that that line was likely to prevail on Monday, Reuters said.
"A lot of euro negativity priced in so a Greece deal may give a one day spike in euro against dollar, which would mean we could see a strong short term move up by oil," said Tom James Chairman & Co-Founder of Navitas Resources. "So if you have to be short oil for some reason you could be in pain sometime this week."
Brent crude and U.S. crude futures hit fresh eight and nine-month highs, respectively during the Asia trading session after Iran cut supply to Britain and France. A move over the weekend by China to easemonetary policy also boosted sentiment.
"While macro data flow from the U.S. continued to be surprisingly healthy, and there were encouraging developments over the next phase of the bailout for Greece, in our opinion, the key oil price drivers were crude supply disruptions and we are not just talking about Iran," Societe Generale oil analysts led by Michael Wittner said in a report.
The bank identified the "big 3 current disruptions" as South Sudan, Syria, and Yemen, where oil output has been reduced by a total 730,000 barrels a day. "The level of these disruptions has gradually been creeping up, and has started to have an impact on the markets."
Headline risk out of Iran continues to keep markets on edge and contribute to a building of the risk premium. In the latest development, Iran ordered a halt to its oil sales to Britain and France on Sunday in a move seen as retaliation against tightening EU sanctions, as a team of U.N. inspectors flew to Tehran to press the Islamic Republic over its disputed nuclear program.
The European Union enraged Tehran last month when it decided to impose a boycott on its oil from July 1. Iran, the world's fifth-largest oil exporter, responded by threatening to close the Strait of Hormuz, the main Gulf oil shipping lane.
In a Feb. 15 research note, Deutsche Bank's Soozhana Choi said global threats to oil supply were now looking the worst since the late 1970s or the early 1980s: "Our assertion is in part because of the Iranian threat to close the Strait of Hormuz. We view a blockade of the Strait as a low probability given the serious economic damage it would have on Iran itself. However, the mere utterance of such a threat is a grave concern for the oil market given the strategic importance of the Strait on a global scale."
Kevin Kerr of Kerr Trading International added: "I think we will see more bullish undertones as long as the situation with Iran remains tense and uncertain but we are reaching critical levels here in crude and will need more data to push it much higher."
Brent crude last week topped $120, validating a forecast from Dhiren Sarin, Barclays Capital's Asia-Pac Chief Technical Strategist, who predicted move to $120.40 or $120.75 a week ago. Sarin said Brent's move above $120.75 "would place the $127 area (2011 peaks) in focus."
For this week, "we are maintaining our bullish outlook of the past couple of weeks as the uptrend has been orderly for a push towards $103.90 in WTI crude," Sarin said.