Oil producers expects the price of fuel to increase as global demand continues to rise for the third year running.
The Organisation for Petroleum Exporting Countries (OPEC) says world oil demand has increased by 350,000 barrels a day in the past 12 months.
Global demand now sits at an average of 97.6 million barrels a day.
This comes at a time when OPEC members have had the brakes on output to drain off a glut oil in storage.
The group expects output to balance demand by the end of 2018.
Shale Oil threat from North America
Oil prices did not react to the report – the cost of a barrel of crude remain unchanged at $64.
Earlier this year prices peaked at $70 – the highest price since the last quarter of 2014 and well below the $100 plus last seen several years ago.
“Recently, healthy and steady economic development in major global oil demand centres was the key driver behind strong oil demand growth,” said the OPEC report.
“This close linkage between economic growth and oil demand is foreseen to continue, at least for the short term.”
OPEC sees shale producers as a threat as prices rise leaving the drillers with bigger margins for profit as exploration and production is cheaper than deep-water or extracting from beneath the ground.
Good news for oil and gas jobs
“The steady oil price recovery since summer 2017 and renewed interest in growth opportunities have led to oil majors catching up in terms of exploration activity this year, both in the shale industry and offshore deep water,” OPEC said, referring to the USA.
“The market is only expected to return to balance towards the end of this year.”
OPEC, Russia and several other non-OPEC producers agreed to cut supplies a year ago to deal with a global glut of crude that had built up since 2014. The pact runs until the end of this year.
The news was cheered by exploration and production companies as the easing oil price and falling stockpiles has cleared the way for developing new wells.
Oil and gas workers are also pleased as tens of thousands of jobs were lost around the world as exploration was