MELBOURNE (Oct 12): Oil extended gains near $50 a barrel amid speculation an increase in demand will ease a global glut.

Futures rose as much as 0.6 percent in New York after advancing 9 percent last week. Demand will grow and non-OPEC supply is due to contract, Abdalla Salem El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries, said at a conference in Kuwait City on Sunday. Prices have bottomed and there are signs of a recovery in 2016, according to Qatar’s Energy Minister Mohammed Al Sada.

Oil has fluctuated near $45 a barrel since slumping to a six-year low in August on speculation the crude surplus will persist. OPEC continues to pump above its collective production target while U.S. stockpiles remain about 100 million barrels above the five-year average.

“Oil will probably do a little more work around $50,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “It’s an important level but I expect gains to be extended over the course of the next couple of weeks.”

West Texas Intermediate for November delivery rose as much as 29 cents to $49.92 a barrel on the New York Mercantile Exchange, and was at $49.80 at 12:35 p.m. Sydney time. The contract gained 20 cents to close at $49.63 on Friday after climbing above $50 during intraday trade. The volume of all futures traded was about 42 percent above the 100-day average.

Balanced Market

Brent for November settlement was 9 cents higher at $52.74 a barrel on the London-based ICE Futures Europe exchange. It lost 40 cents to $52.65 on Friday. The European benchmark crude was at a premium of $2.95 to WTI.

“At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016,” El-Badri said. “We have recently seen a contraction in production from some non-OPEC producers and an uptick in demand growth.”

The gap in oil supply and demand is due to close in the third quarter of 2016, Mohammad Ghazi Al-Mutairi, chief executive officer of state-run Kuwait National Petroleum Co., said at the conference. OPEC’s decision to keep its output target at 30 million barrels a day is the “ideal solution” to rebalance the market and support prices, Kuwait Oil Minister Ali Al-Omair said at the same event.