The forecast is based on estimate of possible decisions on OPEC investments and oil production, the data on economics of liquid petroleum products in countries outside the OPEC and the global demand for energy resources.
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The market extended gains as the Department of Energy said that U.S. crude stockpiles slid by 3.4 million barrels last week.
Global production levels are also down because of the declining number of drilling rigs and the closure of high-cost facilities in the United States, according to the report.
“Fundamentally, oversupply still persists”, OPEC said in the report published on Friday.
Canadian oil output was temporarily hit due to closure of plants following the severe wildfires last week.
Prices are up more than 60 percent since January of this year, when they were at their lowest in 12 years.
All eyes will be on OPEC kingpin Saudi Arabia, which has just replaced oil minister Ali al-Naimi after two decades in the post, at the June 2 OPEC meeting for signs of policy changes on its oil supply.
It said output from non-OPEC producers is expected to fall by 800,000 bpd in 2016, larger than previous forecast of 710,000 bpd fall. “Even in the USA, we have given up on high-mileage [per gallon] cars and jumped back into our trucks and SUVs”.
Iraq and Iran continue to produce and while the strength in the price is encouraging, the fundamentals have not shifted and we’re still seeing over-supply in the market.
But coupled with large crude supply interruptions from Canada, Nigeria, Libya, Iraq and Venezuela, and a slowdown in US shale, the agency predicts the “the direction of travel of the oil market (is) towards balance”.
The split between long-term regional rivals Iran and Saudi Arabia prompted accusations that the oil cartel had lost its credibility. The return in December 2015 of Indonesia as an OPEC member has also increased total output.
“Iran has been waiting for this moment for years and they made the best of it”, said Amir Bornaee, an analyst at Genscape who tracks oil vessels.
OPEC left its forecast that world oil demand will rise by 1.20 million bpd this year unchanged. EIA data show USA crude output fell last week to the lowest level since September 2014 to 8.8 million barrels a day.
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Following failed talks over the proposed freeze in output levels, the OPEC reportedly produced 32.44 million barrels per day (bpd) in April, up 188,000 bpd from March.
