IEA Says Oil Prices May Fall Even Further Before Supply Fades in 2016

In this Dec. 13, 2009, file photo, oil personnel work at the Rumaila oil refinery, near the city of Basra, Iraq. OPEC's purpose is to coordinate oil output to keep prices high and stable, to maximize member countries’ revenue but make sure global demand for oil stays strong. A steep, coordinated cut in output could stop and possibly reverse what has been a 30 percent decline in price over five months. (AP Photo/Nabil al-Jurani, File)
In this Dec. 13, 2009, file photo, oil personnel work at the Rumaila oil refinery, near the city of Basra, Iraq. OPEC's purpose is to coordinate oil output to keep prices high and stable, to maximize member countries’ revenue but make sure global demand for oil stays strong. A steep, coordinated cut in output could stop and possibly reverse what has been a 30 percent decline in price over five months. (AP Photo/Nabil al-Jurani, File)
In this Dec. 13, 2009, file photo, oil personnel work at the Rumaila oil refinery, near the city of Basra, Iraq. (AP Photo/Nabil al-Jurani, File)

(Bloomberg) – Oil prices may fall further as the world remains “massively oversupplied,” before markets tighten in 2016 when output growth outside OPEC grinds to a halt, according to the International Energy Agency.

There will be no overall production growth outside the Organization of Petroleum Exporting Countries next year for the first time since 2008, according to the IEA. Growth in U.S. shale oil supplies will stagnate to the middle of 2016 while output declines in Russia, the Paris-based adviser said in its first detailed assessment of the year ahead. Global oil demand growth will slow, the agency predicted.

Oil-producing nations around the world are reeling after OPEC initiated a strategy in November to defend its share of global markets by pressuring rivals to curb output. Oil prices, about 45 percent lower than a year ago, may need to decline further to reduce the supply surplus, the IEA said.

“The bottom of the market may still be ahead,” said the agency, which advises 29 industrialized nations on energy policy. “Non-OPEC supply growth is expected to grind to a halt in 2016 as lower oil prices and spending cuts take a toll.”

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