(Bloomberg) -- Oil extended this year's rally to almost $80 a barrel amid signs of a tightening physical market.West Texas Intermediate earlier breached the key level before paring gains to close up 2.2% at the highest settlement price since November. Crude's time spreads, which represent physical-market conditions, have exploded higher this week in a sign of tightening supply and demand balances.“$80 has been a psychological level for crude, and holding this level could provide some positive momentum signals for trend-following strategies,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.Geopolitical tensions — including the Israel-Hamas war and attacks on tankers in the Red Sea — have underpinned some gains, with scores of Palestinians killed and injured in an outbreak of violence on Thursday. The climb has been supported by supply cuts from OPEC and its allies, and the group is widely expected to prolong the reductions into the second quarter. But rising non-OPEC supply and persistent concerns about China's outlook have restrained the rally. The nation's factory activity shrank again last month, adding to signs of weak demand.OPEC+ is expected to extend its current supply cuts into the next quarter in a bid to avert a global glut and prop up prices, according to a recent Bloomberg survey. The group has put in place about 2 million barrels-a-day of curbs.More stories like this are available on bloomberg.com©2024 Bloomberg L.P.