[ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19" ihc_mb_template="1"] Recently, the oil prices have continued to increase, touching levels not seen since October 2018. Not surprisingly the markets are abuzz with the possibility of a $100 oil and many have even started to highlight that a supply deficit can be expected. The overall mood in the market is very bullish as evidenced by the increase in net long positions in both Brent and WTI, last week, by 18,000 and 11,000 respectively. However, is this sustainable? If yes, will we actually see a $100 oil? There is no answer to that. Recently, many factors have contributed to the overall ascent of prices supported by Iranian elections; OPEC's announcement as they plan to stick to their production increase, global vaccination drive and positive outlooks vis a viz global economic growth. This is feeding the sentiment of the people, traders and therefore the whole markets resulting into a positive feedback loop. According to an article by World Bank, global economy is set to stage it best post recessionary recovery in 80 years! However, needless to mention that this growth will be highly skewed, with the emerging and developing markets still facing headwinds. However, there are factors that may halt this rally towards a $100. One of the factors is Chinese demand. According to recent estimates, demand of iron ore, coal, oil in China dropped in May as compared to the last month, with, for instance, crude oil imports 14.6 percent lower than the same time last year (May). Also, as prices have continued to increase, Chinese refineries have found it convenient to tap into their reserves (built when prices were low) instead of import more. Chinese refiners process 589,000 bpd more oil than what was available to them according to an article by Clyde Russell. If this continues, a lower demand number by China can certainly slowdown the current bullishness. Source: Nasdaq Moreover, the possibility of lifting of sanctions from Iran can also spell some trouble for the mathematics OPEC+ has done so as to facilitate a production increase. Iran can bring more than 1 mbpd to the markets increasing their exports (and production). Finally, rising prices and capital discipline can also result in an increasing U.S. Shale production, however, this is more of a longer term factor than a near term or short term one as shale production as despite a 400 percent increase in Frack Crews, the boost to production is absent. As of now, the mood is bullish and there is also an overrepresentativeness of good news and underrepresentation of bad news in the market. Time will tell. I personally do not believe that we will touch triple digits sans a geopolitical event. By Osama Rizvi [/ihc-hide-content]