The International Energy Agency (IEA) in its monthly report mentioned that it was sharply increasing its demand growth outlook for present year and for 2016. It also mentioned that the non-OPEC supply growth is expected to decline next year.

IEA said, “While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 - suggesting global inventories will pile up further”.

IEA’s view is in line with the US government’s which on Tuesday lowered its production forecasts, signaling that a 60% rout in benchmark prices since last summer may finally be weighing on shale output.

Oil prices have fallen below $50 per barrel, which are being pressured by bulks of supply and a strong dollar. The views from the IEA are more bullish than those of OPEC, which on Tuesday raised its forecast of oil supplies from non-member countries.

The IEA stated that it saw global oil demand rising by 1.6 million barrels per day (bpd) in 2015. The demand was up 260,000 bpd from its last month’s forecast, citing solid economic growth and consumers responding to lower prices.

It is so far the biggest growth in five years, said IEA. It also said that persistent macroeconomic strength will support above-trend growth at 1.4 million bpd in 2016, up 410,000 bpd from its previous forecast.

IEA said the stronger demand outlook and slower non-OPEC growth have raised the demand on OPEC crude for 2016 to 30.8 million bpd, up 1.4 million bpd year-on-year.

But the new call on OPEC is still far below the group’s current production volumes, which are holding steady.