Oil prices may have “bottomed out”, the west’s energy adviser said on Friday, seeing an end to a 20-month rout that is finally forcing high-cost producers to curtail output. The International Energy Agency, which in February warned recovering prices might be a “false dawn” for the industry, now sees signs that the market may be balancing quicker than previously thought. Oil has bounced by almost 50 per cent since hitting a 13-year low near $27 a barrel in January, helping to spur a wider rally in commodity markets and natural resource stocks. “For prices there may be light at the end of what has been a long, dark tunnel,” the Paris-based group said in its monthly report. “It is clear that the current direction of travel is the correct one, although there is a long way to go.
Attempts by Saudi Arabia and Russia to lead some of the world’s leading producers in a global pact to freeze output have helped prices recover while supply disruptions in Iraq and Nigeria have helped tighten the market. There are doubts, however, that a deal will be struck, with Opec-member Iran unwilling to restrict production just two months after Western sanctions targeting its exports were lifted. While the IEA still expects supplies to continue to outstrip demand until 2017, the agency now sees lower prices having a bigger effect on US shale companies.