OPEC: 'Overflowing' supply weighing on oil prices

We're in a 'new oil order': Goldman Sachs
We're in a 'new oil order': Goldman Sachs

The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that oil demand growth was "yet to show any signs of accelerating." However, it still hiked its forecast for 2015, predicting that low prices would help to boost sales later in the year.

In its monthly report, the cartel forecast that demand for its crude oil would rise to average around 29.21 million barrels per day (bpd) in 2015, up by around 430,000 on its previous estimate.

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Oil prices rose following the report, with Brent crude climbing over 1 percent to trade at $58.41 per barrel, while U.S. crude rallied around 3 percent to $53.23 at around 15.00 London time.

"Crude oil prices started 2015 at a near six-year low, amid plentiful global oil supplies that have pushed oil prices down by almost 60 percent since June 2014, with oil demand growth yet to show signs of accelerating," OPEC said.

"This time the sharp fall in prices has been mainly driven by excess supply. As a result, lower prices are likely to help to accelerate the pace of oil demand growth this time," the group added.

A worker at the Nahr Bin Umar field, Iraq.
Essam Al-Sudani | Reuters

Crude oil prices continued their downward trajectory throughout January, with "overflowing oil supplies and sluggish demand," weighing on prices, OPEC said. Both Brent and U.S. crude ended below $50 per barrel for the first time in over five-and-a-half years.

Meanwhile, OPEC slashed its forecast for non-OPEC oil supply on Monday to average 850,000 bpd in 2015. This was down 420,000 bpd on last month's forecast, with OPEC attributing the cut largely to the slowdown in the U.S. shale boom.

"U.S. onshore drilling activity in parts of both emerging and mature oil production regions declined by 288 rigs from a peak of 1,551 in early October to 1,263 rigs in January, because of unattractive economic returns," the report found.

Read MoreOPEC is to blame for the oil swoon: BIS

OPEC's report comes after the Bank of International Settlements said rather than the global glut of crude, OPEC's recent decision not to cut production"has been key to the fall" in the price of oil. Other factors, such as increased indebtedness in the oil sector in recent years have also exacerbated it, the bank said.