(Bloomberg) -- Brent oil closed near a 10-month high, extending a rally driven by supply curbs from OPEC+ leaders.

The gains in recent sessions have been accompanied by a jump in key timespreads that suggest the market is undersupplied, while bullish call options are also getting more expensive. 

Still, oil’s ascent into overbought territory leaves the market vulnerable to a correction. Earlier in the session, crude dropped more than $1 after Saudi Aramco CEO Amin Nasser lowered the company’s long-term demand outlook and Saudi Energy Minister Prince Abdulaziz bin Salman said “the jury is still out” on China consumption. Notwithstanding the remarks, both Nasser and Prince Abdulaziz expressed confidence in the market. 

“The latest buying spree has taken prices too high too fast, so any type of negative news can trigger a dramatic selloff,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “But overall fundamentals remain tight on the supply side. Until the true fundamentals change, the market will seem resilient to long lasting selloffs.”

Read: Surging Physical Oil Market Brings $100 Crude Back in Sight

In the physical market, refined products like diesel are increasingly flashing signs of tightness, with the world’s refineries proving powerless to make enough of the industrial fuel. Prices have far outstripped those for crude. 

Oil is up about 10% this year thanks to OPEC+ curbs, and speculators have boosted net-bullish wagers on Brent and US benchmark West Texas Intermediate to a combined 15-month high. The surge looks set to fan inflationary pressures around the globe just as central bankers try to determine whether to continue hiking interest rates. This will be an important week for monetary policy, with decisions due from the Fed and the Bank of England, among others.

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--With assistance from Alex Longley.

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