After long years of punishingly low oil prices, there is "increasing evidence" that the oil market is moving closer to reaching a healthy balance between supply and demand, OPEC said today.
"Both futures contracts continue to be supported by increasing evidence that the oil market is heading smoothly toward rebalancing, lower crude oil stocks, healthy demand and geopolitical tensions," the Organisation of the Petroleum Exporting Countries said in its regular monthly oil market report.
Oil prices have risen in recent months, after both OPEC and non-OPEC countries struck a landmark deal at the end of last year to cut back production to combat a global oil glut.
After hitting a 10-year low of less than USD 30 in January, down from a peak of more than USD 100 in mid-2014, oil prices have recently been hovering around the USD 55 mark.
In Abu Dhabi today, the UAE energy minister Suheil al- Mazrouei said that oil producers were expected to unanimously extend a production cut accord later this month, but its duration was still under discussion.
"I think this group of committed and responsible producers came together... and I think they will continue to do what it takes to take us to the next level," he told the ADIPEC international oil conference.
In its report, OPEC upgraded its forecast for global oil demand growth for 2017 and 2018, while saying oil output growth was projected to slow.
The cartel said that it is forecasting an increase in world oil demand of 1.53 million barrels per day (bpd) to an average 96.94 million bpd this year.
Previously, OPEC had been projecting an increase in global oil demand in 2017 of 1.45 million bpd.
The upward revision was primarily to "reflect better- than-expected data from China" in the third quarter, OPEC said.
For 2018, "global oil demand growth is expected at around 1.51 million bpd," an upward revision of 130,000 bpd from the previous forecast.
This reflected "improved expectations" for countries in Europe, Asia Pacific, China, India and Africa, the report said.
At the same time, OPEC downgraded its forecasts for growth in world oil supply.
This year, non-OPEC countries were projected to pump 650,000 additional barrels per day bringing daily average output to 57.67 million bpd.
But that was 20,000 barrels per day less than OPEC had been pencilling in previously.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)