There is no end in sight to the global oil glut according to the International Energy Agency which does not believe prices will rise significantly this year from current low levels.
However, in its latest assessment the IEA said it does not expect crude prices to follow some of the most extreme forecasts and fall to as low as $10 a barrel.
The organisation, which coordinates energy policies of industrialised countries, sees demand growth slowing even as Iran and Iraq increase production.
The IEA also does not think OPEC will cut a deal with other producers to reduce output.
“Persistent speculation about a deal between OPEC and leading non-OPEC producers to cut output appears to be just that: speculation. It is OPEC’s business whether or not it makes output cuts either alone or in concert with other producers but the likelihood of coordinated cuts is very low,” the IEA said.
Oil prices have collapsed as OPEC has pumped more in an attempt to drive higher-cost producers such as US shale companies out of the market. With no demand in a slowing global economy, much of that additional oil is being put in storage.
US shale oil output has started to decline because of low prices and OPEC has said it sees the market rebalancing sometime later in 2016 when demand finally meets supply.
But the IEA believes supply may still exceed demand throughout the whole of 2016 and added it saw non-OPEC output falling by just 0.6 million barrels per day in 2016.
“The number could be higher of course and many senior international oil company figures have said so but there is a lingering feeling that the big fall-off in production from US shale producers is taking an awful long time to happen. Perhaps resilience still has some way to go,” the IEA said.