Brent crude hit a three-month high on Monday, extending gains that have lifted crude benchmarks by more than a third from this year’s lows on an improving global outlook and stronger sentiment for a market recovery.

Front-month Brent crude futures LCOc1 traded as high as $39.50, the highest since early December, and were trading at $39.30 a barrel at 1230 GMT, up 58 cents from their last settlement. In January, prices fell to levels not seen since 2003.

U.S. West Texas Intermediate (WTI) futures fetched $36.53 a barrel, up 61 cents from the last close. The day’s high of $36.72 was more than 40 percent above February lows.

The May WTI contract settled on Friday at $35.92 a barrel, up 3.91 percent.

The gains were driven partly by a rally that took Asian equities to two-month highs. U.S. energy firms also cut oil rigs for an 11th week in a row to the lowest since December 2009, as producers slashed costs.

Bets on rising Brent crude prices hit a fresh record high in the week to March 1, according to data from the InterContinental Exchange, and major OPEC producers are privately starting to talk about a new oil price equilibrium of $50 a barrel, according to New York-based consultancy PIRA.

But analysts warned the glut of physical oil could again weigh on prices.

“The past days’ oil price rally was from our perspective less related to a shift in fundamentals but a recovery of sentiment,” said Norbert Ruecker, head of commodities research with Julius Baer, adding the bounce did not yet herald a long-term recovery.

China imposed a cap on its energy consumption by 2020, marking the first time the world’s second-biggest economy has set such a target and casting doubt on its consumption growth. The National People’s Congress, or parliament, opens its annual session this week.

Technical analysts said charts showed the rally could be near its end. And others warned that rising prices raised the prospect of U.S. shale oil producers hedging their production and increasing rig counts as a result.

“We are now getting very close to where we could see the rig count ticking higher,” said Bjarne Schieldrop, chief commodities analyst with SEB in Oslo. “You’re going to have some headwinds in the oil price as soon as you see the rig count increase.”

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