Crude oil prices surged 19% in four days since last Wednesday, the largest four-day percentage gain since 2009. Oil had tumbled from more than $107 to less than $45 a barrel in seven months due to slowing demand growth and a global supply glut. The United States became the world’s biggest crude producer because of new technologies, and the Organization of Petroleum Exporting Countries (OPEC) decided not to curb their own supply to prop up the price. However, developments in recent days have pointed to an eventual slowdown in oil production, causing the price to rebound in a market pullback.

The main factor pushing oil prices higher is large oil companies announcing they will be cutting spending on new projects, pointing to an eventual slowdown in production. BP PLC did so on Tuesday, revealing they will shelve some planned investments after lower prices drove it to a loss for the fourth quarter. These cutbacks have caused the number of rigs drilling for oil in the US to fall to a three-year low, a sign that the search for crude deposits has lost momentum. Other factors are worker strikes at several US refineries, which have caused concern that production could be decreased, and an increase in oil-product prices.

Investors and analysts are watching to see if this was a bottom for oil prices and if they will continue to rise. Even with the prospect of reduced oil production, the world will have spare oil for some time. The reduced investment in drilling by large oil companies will take months, or even years, to translate into lower output. Oil inventories in the meantime continue to build up, with storage facilities in the US storing the largest amount of oil in 84 years, and stockpiles rose again last week. While the US economy appears to be steadily improving, growth in China is slowing and the European economy is declining, decreasing the demand for oil.

After such a large drop, it is most likely that the recent pullback is a sign that oil prices are starting to stabilize. However, don’t expect oil prices to get back to over $100 any time soon. The supply surplus will remain in the market for at least the next 12-months, preventing any extreme gains in the short term. However, the outlook for oil continues to look positive in the long term, and will most likely increase slightly by the end of the year as I Know First suggested in the oil forecast for 2015 article.

I Know First’s algorithm correctly predicted that oil would rebound in the Oil Price Forecast: 11.47% Average Return in 14 Days forecast from February 4th. The algorithm assigned brent crude a positive signal strength of 12.47 for the two-week time period on January 20th. Since that time, crude oil has increased over 16%. We at I Know First also explained the fall of oil prices in an article posted on Seeking Alpha, titled Oil Forecast For 2015 Based On A Predictive Algorithm. In the article, I Know First predicted that the oil prices would rise by the end of 2015. The recent rally has been a good start to this prediction.