Investing.com -The International Energy Agency (IEA) noted the steep drop in global oil supply growth but said it expects the market to begin rebalancing in 2017, according to a report released on Monday.
“Global oil supply growth is plunging as an extended period of low prices takes its toll”, the IEA said in its annual Medium-Term Oil Market Report (MTOMR).
“While U.S. light, tight oil (LTO) output is falling steeply for now, the market will begin rebalancing in 2017,” according to the report.
The agency also forecast that the U.S. and Iran would lead production gains among non-OPEC and OPEC countries, respectively, by 2021.
The report further noted that, while oil prices should start to rise gradually when rebalancing begins, “the availability of resources that can be easily and quickly tapped will limit the scope of rallies – at least in the near term”.
Nonetheless, the IEA warned of the risk of an oil price spike in the later part of the outlook period due to insufficient investment.
“It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future,” said IEA Executive Director Fatih Birol, launching the report at IHS CERAWeek.
In the market, crude oil futures for April delivery traded up 4.09% to $34.09 at 12:00GMT or 7:00AM ET.
Brent oil, for its part, gained 3.76% to $34.25.