Worldwide oil demand has been steadily climbing for years, and it recently topped 100 million barrels per day (BPD) for the first time in history, according to data from the International Energy Agency (IEA). That should continue, with the IEA expecting oil demand to march higher for at least the next five years. That's good news for oil producers, which can continue expanding their output so that the industry can keep up with demand growth.

No peak in sight

The IEA recently released its latest five-year oil market outlook. One of the key takeaways of that report was that oil demand growth should continue rising. Global consumption has been growing at a brisk pace in recent years, having increased by 1.3 million BPD last year to an average of 99.2 million BPD. Meanwhile, the IEA sees oil demand growth accelerating this year to 1.4 million BPD, pushing the daily average to 100.6 million BPD.

Looking further ahead, the IEA did note that "global oil demand growth is set to ease, in particular as China slows down," which has it anticipating an increase in the "annual average of 1.2 million BPD to 2024." As such, "the IEA continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars."

This outlook is great news for oil producers, since rising demand should help boost oil prices as long as producers don't pump too much oil. That's growing less likely, since oil producers in the U.S. are increasingly holding back the throttle so that they can generate excess cash. In most cases, oil producers are spending well below the cash flows that can haul in at $50 a barrel so that they can produce a gusher of profits over the next few years.

These oil stocks are well positioned for what lies ahead

Devon Energy (NYSE:DVN) is one of several companies that have repositioned their businesses to prosper at lower oil prices. The company has sold off several higher-cost assets so that it could focus its four best oil regions. As a result, the company can now generate enough cash at $46 oil to grow its production at a 12% to 17% compound annual growth rate over the next three years as well as pay its dividend. Meanwhile, Devon can produce an increasingly prodigious gusher of free cash at oil prices above that level. For example, if oil averages $55 a barrel over the next three years, which is slightly below its current price point, Devon can produce $1.6 billion in free cash, which it intends to return to investors through continued share repurchases.

Marathon Oil (NYSE:MRO) has also worked hard to put itself in the position of cashing in on lower oil prices. As a result, the company can generate enough cash at $45 oil to fund the new wells needed to grow production at a double-digit rate and pay its dividend with room to spare. That sets Marathon up to produce a gusher of free cash at higher oil prices. The company estimates that it can generate more than $750 million in free cash at $50 oil over the next two years, with that number ballooning to more than $2.2 billion if crude averages $60 a barrel. Like Devon Energy, Marathon expects to return the bulk of that money to investors through continued share repurchases.

EOG Resources (NYSE:EOG), meanwhile, set its business to run on $50 oil. At that price point, the company can grow its U.S. oil production at a mid-teens rate and pay its dividend with room to spare. That sets it up to produce a growing stream of free cash if oil is above that level. EOG Resources plans to use that excess cash to grow its dividend at a more than 19% annual rate, pay down $3 billion in debt by 2021, and potentially buy back some of its stock. EOG believes that its combination of high-return production growth and dividend increases will enable it to deliver market-smashing total returns in the coming years.

The oil industry has plenty of fuel to continue growing

While oil demand will eventually peak and then start declining as electric vehicles take a greater share of the market, that isn't expected to happen in the next five years. Oil prices should therefore remain high enough so that producers can make sizable profits, a large portion of which they intend to return to investors through 0higher dividends and share repurchases. That could give the oil industry the fuel to potentially produce strong returns for investors in the coming years.

This article originally appeared in the Motley Fool.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.