Is it not a dream for oil prices to break 100? Lack of supply will be the backbone of crude oil bulls

There are two very different views on how the oil market is going this year, but both sides agree that this year will be a turbulent year
for the oil market.

Bears believe that the oil market will be oversupplied this year, oil inventories will rise, and OPEC+ may need to consider a new round of production
cuts.
Bulls see low oil inventories, reduced spare capacity (which is not normally used in response to unexpected disruptions in oil supply) due to a lack of investment, and growing clarity
on the outlook for triple-digit oil prices in 2022.

Crude oil strategist Julian Lee believes the latter scenario is more
likely unless oil demand growth slows significantly.

Last week, an analysis ahead of the OPEC meeting showed that global oil inventories would continue to rise in the coming year and offset almost all of the shortfalls
in 2021.

This growth forecast is not based on pessimistic demand expectations, with OPEC+ believing that global oil consumption will surpass pre-pandemic highs of nearly 101 million b/d in 2022 and surpass 103 million b/d
in December.

While there is significant uncertainty about the impact of the Omicron variant on oil demand, evidence from the past month shows that while the new variant is more contagious, the severity of its cause is also greatly reduced
.
Some countries have already begun to lift restrictions imposed in December, giving impetus
to the possibility of more long-haul flights and strong growth in oil demand in the coming months.

While OPEC+ predicts that potential weakness in the oil market stems from oversupply, analyst Julian Lee sees practical problems
with this forecast.

Julian Lee said the forecast is based on production targets for only 19 of its member countries, but most of them are not on track to meet their production targets
.
OPEC+ actually produced 625,000 b/d below its overall target in December, and while the gap was slightly improved from November's 655,000 b/d gap, it also lasted seven months below target
.

Julian Lee believes that this gap will not close
anytime soon.
Unless producers with spare capacity can make up for the production gap, the deficit will never be eliminated
.
But that seems unlikely, and the oil production deficit will only grow as
OPEC+ plans to increase production by 400,000 barrels per month continues.

As bulls say, oil inventories are already low
.
According to the Organisation for Economic Co-operation and Development (OECD), oil inventories are currently at 174 million barrels, down from the average of 6%
for the same period from 2015 to 2019.

While increasing OPEC+ production may increase inventories, it will also erode spare capacity around the world, and this is already happening
.

While Libya managed to maintain average production at 1 million b/d in 2021, its oil production was more than 25 percent lower than
the previous year due to emergency repairs due to a malfunction in its largest export pipeline.

While the UAE, Saudi Arabia and Iraq are all able to exceed their benchmark levels under their production cuts, they are likely to be among the few OPEC+ members
that will meet the target.

When OPEC returns to pre-cut production levels (expected in September), the three countries will have all of the world's spare oil capacity, but are expected to be below 2.
5 million b/d, accounting for only 2.
5%
of global oil demand.
By historical standards, this would be a very weak buffer and provide support
to the outlook for a bullish market.