Higher-than-forecast demand should bolster oil prices throughout 2016, despite high stocks continuing to exert downward pressure on prices, the IEA said Wednesday.

Global demand for oil will grow by 1.4 million barrels per day (bpd) this year to 96.1 million bpd, the International Energy Agency (IEA) said in its monthly oil market report, revising up last month's forecasts of a 1.3 million bpd rise.

While predicting a "return to balance" in overall "big picture" market direction, the IEA said "the existence of very high oil stocks is a threat to the recent stability of oil prices."

Last month the agency had warned significant price rises were unlikely given that "there is an enormous inventory overhang to clear."

The IEA noted crude prices had edged off an early June peak above $52 dollars per barrel to trade in a $45-$50 range -- a stark contrast to the nearly daily price falls earlier this year.

"Our underlying message that the market is heading to balance remains on track, but the modest fall back in oil prices in recent days to closer to $45/bbl is a reminder that the road ahead is far from smooth," the IEA concluded.

"The adjustments to our data this month suggest that little has changed with the market showing an extraordinary transformation from a major surplus in 1Q16 to near-balance in 2Q16," the report added.

Oil prices, which slumped below the $30 mark in January, rebounded earlier this week from two-month lows as an OPEC forecast pointed to an easing of global oversupply.

US benchmark West Texas Intermediate for August delivery Tuesday jumped $2.04 to $46.80 a barrel on the New York Mercantile Exchange, while in London, Brent North Sea crude for delivery in September added $2.22 to $48.47.

(AFP)