The Organization of Petroleum Exporting Countries (OPEC) upped its forecasts for global demand on Monday, giving oil prices a boost, amid ongoing volatility.
In its monthly report, OPEC said demand was set to grow by 1.28 million barrels per day in 2015 - an upward revision of 100,000 barrels per day since its last report. Next year, demand is set to increase to 1.34 million barrels per day.
This would outpace the growth of oil supply from both OPEC and non-OPEC sources, the organization said, and "imply an improvement towards a more balanced market."
Oil prices pared losses on the news, to trade around $58.28 a barrel on Monday.
OPEC reported an increase in its own production by 283,000 barrels per day in June, to average of 31.38 million barrels per day. This comes despite a fall off in the oil price since the middle of May.
Oversupply in the oil market caused the price of Brent crude to crash 60 percent between June 2014 and January. It is currently down around 45 percent from a year ago and was trading around $58.29 a barrel on Monday.
In contrast to the International Energy Agency (IEA), OPEC said that oil supply from non-OPEC countries had increased this year and was set to continue to grow, albeit at a slower rate.
The IEA, however, said that non-OPEC production would "grind to a halt in 2016 as lower oil prices and spending cuts take a toll."
"What they (OPEC) are saying is that demand will remain steady, but supply growth will be slower from the non-OPEC countries, so the market will tighten," Neil Atkinson, head of analysis at Lloyd's List Intelligence, told CNBC.
This year, supply has outstripped demand as OPEC refused to cut output in the face of falling prices. The cartel was accused of attempting to build market share, as oil production in the U.S. - where it is more expensive - fell off.
Atkinson added that continued oversupply was set to continue this year, meaning oil prices would "remain weak".
"They are still talking about a surplus of supply over demand (in 2015) so it's hard to see who there can be any significant improvement in prices until well into 2016," Atkinson said.
A number of factors have contributed to the recent movement in the price of crude.
On Monday, Iran and six world powers appeared close to closing a nuclear deal that could see the country put more oil on the world market following an end to sanctions.
This additional oil supply could push prices lower, but is likely to take a while as Iran would need to invest heavily in its infrastructure and the details of any deal still need to be put into place.
At the same time, recent volatility in Chinese stocks has renewed concerns about a severe slowdown in the world's second-largest economy, which could lead to a further drop-off in demand.
"A fall in the Chinese stock market is the biggest driver in the fall in prices because it is causing concern about the potential for Chinese hard landing, though that concern is probably overblown," Richard Mallinson, geopolitical analyst at Energy Aspects, told CNBC.
There is a potential upside to lower oil prices -- economists predicted that this could put more money in consumers' pockets and help economies across the world. But OPEC warned that other geopolitical factors were preventing this from happening.
"While current oil prices will continue to support the world economy to some extent, numerous challenges are likely to offset this positive effect, preventing higher growth," OPEC said in its monthly report.
"Among these issues are the high debt levels across the OECD, still high unemployment in the euro zone in combination with the uncertainties in Greece, expectations of rising interest rates in the U.S., overcapacity amid a slowing economy in China, and on-going geopolitical issues."