The International Energy Agency (IEA) said oil prices may have bottomed as output in the US and other non-OPEC producers begins to fall and an increase in supply from Iran has been less dramatic.
The body, which coordinated energy policies of industrialised nations, said it believes non-OPEC output would fall by 750,000 barrels per day this year, compared to a previous estimate of 600,000 bpd.
US production will decline by 530,000 bpd in 2016, the IEA added.
Output from OPEC countries dropped by 90,000 bpd in February due to production outages in Nigeria, Iraq and the United Arab Emirates.
Global oil and product stocks are expected to rise heavily in the first half of 2016, by betweeb 1.5million to 1.9million bpd but slowing to just 0.2million bpd in the second half.
The IEA said: “For prices there may be light at the end of what has been a long, dark tunnel, but we cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance. It is clear that the current direction of travel is the correct one, although with a long way to go.”
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