But the global market will return to balance only towards the end of 2018 as higher prices encourage the United States and other non-member producers to pump more, Opec said in a monthly report.
The Organisation of the Petroleum Exporting Countries (Opec) said world oil demand would rise by 1.59 million barrels per day (bpd) this year, an increase of 60,000bpd from the previous forecast.
"Recently, healthy and steady economic development in major global oil demand centres was the key driver behind strong oil demand growth," Vienna-based Opec said in the report.
"This close linkage between economic growth and oil demand is foreseen to continue, at least for the short term."
Oil prices were little changed after the release of the report, maintaining an earlier gain to trade just below $64 a barrel. Prices topped $70 this year for the first time since late 2014.
Balancing the forecast of higher demand, Opec said outside producers would boost supply by 1.4 million bpd this year. That was an increase of 250,000bpd from last month and the third consecutive rise from 870,000bpd forecast in November.
"The steady oil price recovery since summer 2017 and renewed interest in growth opportunities have led to oil majors catching up in terms of exploration activity this year, both in the shale industry and offshore deep water," Opec said, referring to the US outlook.
"The market is only expected to return to balance towards the end of this year."
Opec's assessment of when the market would rebalance is no earlier than its previous projections, despite higher demand, falling inventories and strong compliance with the supply-cutting deal.
A year ago, Opec, Russia and several other non-Opec producers began to reduce supply in an effort to eradicate a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018.
Opec's production fell in January, based on figures it collects from secondary sources, by 8,000bpd to 32.302 million bpd, the report said.
Adherence by the 11 Opec members with output targets rose to 137 per cent, according to a Reuters calculation based on the Opec figures, higher than 129 per cent in December based on last month's report.
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