The Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on Wednesday. OPEC said that oil supply rose by 130,000 barrels per day (bpd) to 32.33 million bpd in January, compared to December.
The group said noted that oil demand is expected to slow in 2016. Global oil demand growth is expected to be 1.25 billion bpd in 2016, down from its previous forecasts of 1.26 billion bpd. Demand for OPEC oil is expected to be 31.61 million bpd in 2016, down its previous forecasts of 31.65 million bpd.
Non-OPEC output is expected to decline 700,000 bpd in 2016 due to low oil prices.
The U.S. oil output is expected to drop by 470,000 bpd in 2016.
Global oil supply surplus is expected to be 720,000 bpd if OPEC continues to produce at its January pace, up from the previous estimate of 530,000 bpd.
The group noted that low oil prices started to have a negative impact on the global economy.
"It seems that the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits," OPEC said.
"Due to the after-effects from the 'great recession', the potential that consumer spending ability could rise, is limited," it added.