|Follow us on:|
An OPEC report pointed to the improving state of the world’s economy as a key driver for higher oil demand which is expected to grow at 1.2 million barrels a day.
The International Energy Agency forecasts a growth in demand at a rate of 1.4 million barrels a day.
Most of the demand will come from Europe and the US, OPEC says.
“More upside to OECD growth may come from fiscal stimulus in the US, but the magnitude and scope of it remains to be seen. Moreover, a continuation of the rebalancing of the oil market after the historic OPEC/non-OPEC declaration of cooperation in December may support oil producers further and may lead to improvements in economic activity, along with renewed investments,” the OPEC report said.
Oil prices have been on the upswing since OPEC members and major non-OPEC producers agreed to significant cuts in production output.
Non-OPEC oil producing countries agreed to cut output by 558,000 barrels a day with the bulk of the cut falling on Russia, one of the world’s largest energy exporting heavyweights.
Russia agreed to cut 300,000 barrels per day silencing fears among some energy analysts that it would not live up to its commitment made several months ago by Russian president Vladimir Putin.
In January, OPEC total production fell by 890,000 barrels a day, with most of the cuts coming from oil giant Saudi Arabia. But the production dip would have been larger had it not been for increased output in Iran and Nigeria, exempt from the current agreement.
International benchmark Brent Crude was up 0.97 per cent to $56.13 a barrel.
The BRICS Post with inputs from Agencies