Lingering concern over the sustainability of high Spanish borrowing costs may limit further gains in the oil market despite heightened tensions in the Middle East, according to CNBC's weekly survey of oil market sentiment.
Brent and U.S. crude futures posted weekly gains of more than 4 percent, both contracts having touched eight-week peaks on Thursday, as fighting raged in the Syrian capital Damascus and just over half of Iran's parliament backed a draft law to block the Strait of Hormuz shipping lane.
"Europe will be back front and center this week with Spanish 10 year (yields) above 7 percent," said Kirk Howell, Chief Operating Officer of SunGard's Kiodex, who has a 'neutral' view this week. "There is definitely real risk of a conflict with Iran and that risk needs to be covered in a portfolio, but I believe both sides will try every avenue to not be seen as the aggressor. We could see a similar situation that we saw in March where no news out of Iran is good news and oil slides without an event."
Six out of 13 respondents, or 46 percent, expect oil prices to rise this week; four (about 31 percent) expect prices to fall while the remaining three believe prices will remain around current levels, CNBC's weekly survey of oil market sentiment shows. Last week's survey correctly predicted prices would rise.
Mike Wittner, Managing Director and Head of Commodities Research, Americas at Societe Generale said the recent gains in the oil market "won't last with the macro environment" and expects "tactical selling" in what is going to be a range bound market.
Aiden Bradley, Managing Director and Head of Asian Oil & Gas at CIMB Research in Singapore, said underlying structural issues - a lack of OPEC spare capacity, rising cost and complexity of projects - will act "like a magnet" pulling prices higher.
"But on a shorter time frame poor economic (and) demand news can naturally see prices fall," Bradley added, saying he has a 'neutral' call this week. "Another neutral to positive week for economic news will see prices at least consolidate last week's gains. However, all it will take is a couple of bad updates on the U.S. and China and we could easily be back to where we started last week."
From a technical perspective, most strategists believe prices will extend gains this week and several are reversing short-positions, or bets that prices will fall.
Dhiren Sarin, Chief Technical Strategist for Asia-Pacific at Barclays Capital said last week's "strength in Brent exceeded our expectations" and is pricing in further upside risk.
"For WTI crude, our focus is on a test of $94.30 and for Brent crude towards $109.25 before looking for a pause. A close above $109.25 in Brent, however, would mean that the market can even get back to $116.05."
Mike Baghdady at Training Traders said he has reversed short positions and is now long above $89.32 and with "break-even stops if one of our exit rules are triggered."
Kevin Kerr, President and CEO of Kerr Trading International has done the same: "We were net short and now have added calls and also bought some futures."
—By CNBC's Sri Jegarajah