It forecast zero growth in non-OPEC oil supply in 2016 after an increase of 1 million bpd in 2015.
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The agency, which advises the world’s biggest economies on energy policy, said “something has to give” because the world oil market was unable to absorb the huge volumes of fuel now being produced.
Crude futures settled little changed on Friday after data showed the USA oil rig count barely rose this week, allaying fears of an acceleration in drilling that could bring on a surfeit of new supply to the market.
Supply within non-OPEC countries like Canada and the U.S.is expected to grind to a halt next year, since low oil prices have energy companies making significant cuts to spending and thus production.
Brent North Sea crude for August, the worldwide benchmark, rose to $58.73 a barrel in London, a gain of 12 cents from Thursday s close.
“The bottom of the market may still be ahead”, the IEA said in its monthly report.
The 2016 numbers are supportive of prices because of the “huge swing” in the trend of non-Opecproduction growth, she said.
“Total U.S. supply will keep growing through 2016, but much more slowly than in 2014, and thanks to natural gas liquids and new deepwater plays rather than onshore crude supply”, it said.
However, the IEA said that growth in demand appeared to have peaked in the first quarter of 2015, at 1.8 mb/d and, “will continue to ease throughout the rest of this year and into next as temporary support fades”. Their output is at a three-year high, led by record levels of output from Iraq, Saudi Arabia and the United Arab Emirates.
“And the group is not slowing down”, the IEA said.
“The prospects on a Greece bailout is encouraging but we’re down on anticipation that an Iran deal may also get done”, said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.
“The rebalancing that began when oil markets set off on an initial 60 percent price drop a year ago has yet to run its course”, it said. “Recent developments suggest that the process will extend well into 2016”.
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Global oil demand growth will slow next year to 1.2 million barrels a day – reaching 95.2 million a day – down from an expansion of 1.4 million a day this year, according to the report.
