The International Energy Agency (IEA) has raised its forecast for global oil demand growth in 2016 by 200,000 barrels/day to 95.8 million barrels/day.

Oil prices might have bottomed as production declines in the United States and other non-OPEC producers accelerate and an increase in Iranian supply has been less than dramatic, the International Energy Agency said on Friday.

Thus, the IEA says non-OPEC output should fall by 750,000 barrels per day (bpd) in 2016, up from the prior forecast of a 600,000 bpd decline.

U.S. WTI crude oil rose 66 cents, or 1.7%, to settle at $38.50 a barrel on the New York Mercantile Exchange.

Goldman Sachs is sounding a little more positive on oil, predicting prices will trade between $25 and $45 a barrel in this year's second quarter, up from a $20-$40 range in the first quarter.

Both contracts were trading more than 45% higher than the lows of earlier this year.

Higher prices for Brent and US crude in the second half of 2016 and 2017 have sparked renewed interest in hedging from producers.

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Iran has been less than keen to join a proposed freeze of output at January levels, preferring to increase output now it is back on world markets. It is clear that the current direction of travel is the correct one, although with a long way to go.

It also said Iran's post-sanctions return to exporting was happening more gradually than expected, keeping its barrels from putting significant pressure on the market. Earlier this month, it cut its growth expectations for the year.

The IEA released its monthly oil market report Friday.

On Monday, Norbert Ruecker, the Head of Commodities Research at Swiss private bank Julius Baer said that the company "still believes that oil prices experience a short-term bounce but no long-term recovery" while analysts at Barclays said that market optimism is "somewhat premature".

"We reiterate our view that oil prices need to remain low for longer, as the oil and capital market rebalancing are only beginning", Goldman said in its report.

The oil market may be starting to rebalance as US production shows signs of declining and output in Nigeria and Kurdistan is disrupted, potentially shrinking the global oversupply, according to Goldman Sachs Group Inc. Equities and crude oil advanced as investors embraced the European Central Bank measures announced by Draghi.