WHY IT MIGHT NOT BE SPRING IN THE OILPATCH JUST YET.

Since the Saudis lopped off the head of oil- price support in December 2014, energy investors — not to mention energy companies and the thousands of Canadians who work for them, or at least used to — have lived through a long dark winter of Game of Thrones proportions.

Yet over the past month, crude has begun to shine again. The price of benchmark West Texas Intermediate has risen by 46 per cent since mid-February, finishing last week approaching the “psychologically important” threshold of US$40 a barrel. ( These days, it seems every US$ 10 increment in the price of oil is “psychologically important.”)

Canadian investors have reaped the benefits. So far in March, the S&P/TSX capped energy index is up more than 13 per cent, taking the broader index up with it, by more than five per cent. The loonie has also recovered against the greenback, at least a bit, making every snowbird’s annual sojourn more affordable.

But will this springtime for oil last?

Well, it’s easy to be pessimistic, for a few reasons.

We have seen price jumps before, only to be disappointed. ( There was a rally last March, too, eventually pushing WTI to US$ 60 in June. And then it fell off a cliff again.)

The trade in oil futures has proven i tself hugely sensitive to short- term data ( not to mention headlines), which makes it hard to count on anything lasting. And at US$ 38.50 a barrel, we are still a long way from where the price was even a year ago.

Still, the International Energy Agency’s most recent monthly report, released last week, seemed to forecast sunnier days ahead.

In fact, the Paris- based IEA pointed to expected declines in non- OPEC production (especially in the United States) this year, along with lower- than- anticipated output from Iran, as reason to suggest that oil prices might, at long last, have bottomed out.

But let’s put emphasis on “might.”

The IEA notes that the putative agreement between Saudi Arabia and Russia to “freeze” production — buzz over which has helped support the recent rally — probably won’t have an impact until the second half of the year. That sort of assumes, though, that the agreement will: (a) actually happen and (b) actually mean something, rather than being a largely meaningless bit of PR.

Iran has expressed zero interest in holding production, and it still has a long way to go to increase output before it hits its targets.

The IEA reports that Iran boosted output last month by just 220,000 barrels — far less than the half a million in extra production Iran predicted before it emerged from international sanctions.

Why the underage? Apparently, bankers and shippers are reluctant to do business with Iran — a sentiment that might be heightened by the current controversy over Iran’s recent ballistic missile tests. U. S. presidential hopeful Hillary Clinton, among others, has called for renewed sanctions.

So Iran’s re- entry into global oil markets, and its contribution to the supply glut, could be slowed even further, which should support the price.

On the other hand, it might stop behaving badly, at least until next time, and at least long enough to reassure financiers and get its production back to expected levels.

That’s the way it is with geopolitics. It’s unpredictable.

Meanwhile, the biggest reason for the IEA’s new tone of optimism is the decline in production from non- OPEC members, especially U. S. shale producers. The agency expects American production to drop by more than half a million barrels a day through 2016, as low prices finally force high-cost producers out of the market.

The question, though, is whether the high- cost producers will stay out of the market once prices recover. If they can’t resist, then increased tight oil production — an important contributor to the supply glut — will just tend to push prices down again.

Speaking of a glut, it hasn’ t gone a nywhere, and it’s still getting bigger. According to the IEA, year- over- year production growth in February was 1.8 million barrels per day, while demand growth in Q4 2015 was 1.2 million bpd. If its forecasts for supply cuts in non- OPEC countries are borne out, the agency expects second- half supply surplus will still be 200,000 barrels a day.

That suggests any supplydriven price recovery might have limited upside.

Let’s not forget, either, that the IEA in its previous monthly report described a “world awash in oil” and sounded a much more negative tone about the supplydemand balance.

Maybe t he world has changed in a month. Or maybe not. In either case, it might pay to be cautious about this rally — or at least not expect too much from it.

SUPPLY GLUT HASN’T GONE ANYWHERE. IT’S GETTING BIGGER.