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|OPEC predicts that economic growth will soak up the oil glut. (AFP/JOE KLAMAR)|
In its regular monthly report, the Organisation of the Petroleum Exporting Countries, said that "increasing evidence that the oil market is heading toward rebalancing" had led to increases in oil prices last month.
OPEC's reference basket price for a price for a barrel of oil hit US$53.44 in September, its highest value since July 2015.
The cartel raised its forecasts for global oil demand due to the improving outlook for economic growth, which increases thirst for crude and other sources of energy.
OPEC now sees the global economy growing by 3.6 per cent this year and by 3.5 per cent in 2018, an increase by a tenth of a percentage point.
Increasing demand for oil will be matched by added supplies, but OPEC's forecasts for the balance of supply and demand foresee a greater reliance on the cartel's output.
Its data for this year show that despite increasing output in real terms by its members as well as non-members, the small rise in OPEC production left the market in deficit in recent months to soak up the glut of supplies.
Oil prices tumbled from over US$100 in 2014 after OPEC nations led by Saudi Arabia cranked up production to try to push out US shale producers which have higher production costs.
After oil tumbled below US$30 last year, OPEC shifted strategy with the production pact that has seen prices recover to fluctuate in the US$50-US$55 range.
OPEC's forecasts see that in 2018 that both rising demand and non-OPEC output will leave room for its members to pump more and reduce the glut in supplies.
However it doesn't see prices climbing soon.
"Oil prices are expected to remain at US$50-55/b in the next year," OPEC said.
"A rise above that level would encourage US oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction" in investments, it added.
The main international crude oil futures contract, Brent, was trading at around US$56.83 in late morning London trading. The main US contract, WTI, was at US$51.30.
A sharp increase in oil prices would tend to discourage consumption and thus growth.