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Lower Supplies Boost Oil Prices, With Demand Expected to Grow

A attendant fills up a car at a gas station in Jiddah, Saudi Arabia, Sept. 15, 2015. Oil prices rose above $50 a barrel Thursday for the first time this year.

Oil prices rose above $50 a barrel Thursday for the first time this year, following a report the oversupply of oil is easing in the United States.

Oil prices have plunged during the past year, hurting oil exporting nations and petroleum companies, which cut jobs and investments in the oil industry.

Economists say the damage to demand in the economy was larger than expected, while the boost to consumers from lower gasoline prices had less impact than experts predicted. As a result, investors worried and stock markets had faltered.

But Thursday, many global stock markets made gains as oil prices rose to their highest level in seven months.

The earlier price plunge grew out of a surge in oil production from advanced technologies, like fracking in the United States, which boosted oil supplies.

In the past when supplies were higher than demand, OPEC nations, particularly Saudi Arabia, have cut production to keep prices strong. But the Saudis have changed their strategy, maintaining production, perhaps hoping that falling prices would force competitors, particularly those that have higher production prices, out of business.

Over the long term, experts at the Organization of Petroleum Exporting Countries predict population growth will boost demand for energy by 50 percent, and oil products will fill most of that demand for decades to come.

OPEC says the global population will grow by 1.7 billion by 2040, and the number of private cars will double to more than two billion, while electric service will expand to many people who now lack access.