Crude prices steadied after earlier declines on Thursday as the International Energy Agency (IEA) said that 2016 would see the biggest fall in non-OPEC production in a generation, helping rebalance a market that has been dogged by oversupply.

The IEA’s chief Fatih Birol said on Thursday that low oil prices had cut investment by about 40 per cent in the past two years, with sharp falls in the United States, Canada, Latin America and Russia.

“This year, we are expecting the biggest decline in non-OPEC oil supply in the last 25 years, almost 700,000 barrels per day. At the same time, global demand growth is in a hectic pace, led by India, China and other emerging countries,” he told reporters in Tokyo.

The comments reversed earlier declines in crude prices.

After falling to a session low of $45.23 per barrel on Thursday, front-month Brent crude futures rose to $45.84 a barrel by 0426 GMT, up 4 cents from their last close.

US crude futures dipped to $43.62 before rising to $44.20 a barrel, up 2 cents from their last close.

Record oil production

Despite the IEA comments, statements by Russia and Iran on Wednesday had weighed on the market.

Russia’s energy minister said it might push oil production to historic highs of over 12 million barrels per day (bpd) just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

Meanwhile, Iran, determined to regain market share following the lifting of sanctions last January, reiterated its intention to reach output of 4 million bpd as soon as possible.

With major producers in West Asia and Russia seemingly racing to raise production, much will depend on US drillers and demand to determine how long the global glut lasts, which sees between 1 million and 2 million barrels of crude pumped every day in excess of demand.

“Any hope of market re-balancing from the current surplus in supply (lies) on the predicted decline in U.S. oil production,’’ French bank BNP Paribas said.

“The US accounts for the bulk of non-OPEC’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the US oil supply proves insufficient to tighten balances, then ... the oil price will remain low,” it added.

In refined products, China saw exports of diesel and gasoline soar, spilling surplus fuel into a market that is already well supplied, and threatening to further cut Asian benchmark refining margins that have halved since the beginning of the year.

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