Oil rallies in response to OPEC report

Expectations of increased demand for oil from the Organization of Petroleum Exporting Countries sent crude oil prices higher in Wednesday trading.

OPEC in its latest monthly market report said global oil demand for 2015 is seen as growing at 1.18 million barrels per day, an increase from last year's growth of 960,000 bpd, but unchanged from OPEC's assessment in May.

Crude oil prices rallied nonetheless. Brent crude oil rose nearly 2 percent to $66.12 per barrel in early Wednesday trading. West Texas Intermediate, the U.S. standard, rallied 2.2 percent early in the trading day to $61.51 per barrel. Both indices are above where they started June 1.

OPEC's decision to keep production levels static pushed oil prices lower last week just as world leaders in Germany said they expected global economic growth to be modest. In its latest market report, OPEC said the overall growth forecast was unchanged for 2015 at 3.3 percent.

While the European economy is expected to grow slightly for 2014, the U.S. economy is accelerating at a slower pace than expected. For Asian economies, OPEC said China and India are standing still, while Japan's economic growth forecast of 1 percent was higher than in previous market reports.

On the supply side, OPEC said production from the 12 member states increased only marginally to 30.9 million bpd for May. Outside of OPEC, production is expected to grow by 680,000 bpd, well below last year's growth of 2.17 million bpd.

OPEC said the rally in oil prices during the first half of the year was fueled largely by strong economic data out of Asia.

"Overall fundamentals still point to a well-supplied market, a fact that should continue to put a ceiling on prices," it said.