Will the oil market finally find balance in 2022?

As reported by oil prices on January 19, the EIA expects that as demand continues to grow, there will be a supply crunch in the oil market, which may push oil prices
higher.
On the other hand, OPEC predicts that the oil market will tend to balance, and even raises production quotas
as a result.

Despite the increase in quotas, OPEC has struggled to meet its production targets, however, this has added to the upward pressure
on oil prices.
As the new year begins, the race to predict where the oil market will go in 2022 is underway
.
Bull and bear markets predict two very different paths, and everyone agrees that this will be a turbulent year
for Big Oil.
One view predicts that supply will recover
as production returns to normal and oil demand stabilizes or decreases.
In this case, stability in oil prices can be expected
.
Another scenario is that demand growth will continue as inventories remain low
.

On Tuesday (Jan.
18), the U.
S.
Energy Information Administration (EIA) raised its oil price outlook by a considerable $5/b
.
However, according to the Energy Information and Analysis report, EIA believes these increases will decline throughout the year as global supply outpaces demand
as soon as the second quarter.

In the longer term, however, EIA expects oil demand to continue to grow, even as global efforts to decarbonize continue to step up
amid increasingly urgent calls from global leaders and environmentalists.
The EIA expects global oil demand to increase by 3.
62 million b/d year-on-year in 2022, up 70,000 b/d
from last month's Short-Term Energy Outlook.
"If this forecast comes true, global oil demand will eventually surpass 2019 levels for the first time since the outbreak began in the early months of 2020 and will exceed 2019 levels by about 260,000 bpd
.
"

OPEC's outlook for the oil market in 2022 is even more optimistic (from the perspective of the oil cartel, not the aforementioned environmentalists).

Global oil demand will surpass pre-pandemic highs of 101 million barrels per day, or even exceed 103 million barrels
per day in December.
However, the final forecast is purely hypothetical, as global economic and geopolitical fluctuations can and will undoubtedly cause problems for jobs
.

Those who predict weakness in the oil market point to an oil glut
following this winter's call for increased supply to deal with a devastating energy shortage in Asia and Europe.
However, a recent Bloomberg opinion piece disputed the oil market weakness forecast for 2022, as this outlook assumes that the 19 output-targeted members of the OPEC+ group will actually supply oil
at these rates.
But it has not been done at the moment, and many have not been able to do so
.
In fact, OPEC has not met its production quota
for seven months in a row.
Last month, the collective target
of 625,000 barrels was not met.

The Bloomberg article argues that this gap will not close
anytime soon.
In fact, the supply gap will never be made up unless
those countries in the OPEC+ alliance that have spare capacity are allowed to make up for the production shortfall of those who do not.
"It seems unlikely
.
" This assertion may be an exaggeration, given the strong worldwide push
for cleaner and renewable energy.

To be sure, the world will continue to rely on fossil fuels for their most basic functions, and demand in developing countries will inevitably continue to grow rapidly
.
However, the energy market is undergoing dramatic changes in harmony and the dominance of fossil fuels will not continue to be challenged
.
However, in 2022, oil demand will continue to expand, and oil prices are likely to soar
with it.