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A slumping energy sector was one of the dominant forces behind US equities in 2015

Oil may have “bottomed out”, said the International Energy Agency on Friday in some of its most postitive comments this year, reflecting optimism that the 20-month price rout has finally forced high-cost producers to curtail production.

The IEA, which ini February warned that the recovery in prices might be a “false dawn”, now sees signs the market may be balancing quicker than previously thought.

While cautioning that supply will probably outstrip demand until 2017, the comments from the west’s energy adviser suggest that the near 50 per cent rally since prices hit a 13-year low around $27 a barrel in January could be sustained.

“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.”

The IEA expects output from countries outside the Opec production cartel to drop by 750,000 barrels a day this year, against a previous estimate of 600,000 b/d, led by declines in US shale output.

The more bullish outlook from the IEA stands in marked contrast to other forecasters who believe the recovery in prices has come too soon and could delay the rebalancing of the market.

Goldman Sachs, one of the most influential banks in commodity markets, said on Friday an early rally in oil prices could prove “self defeating” as it would reverse “nascent supply curtailments”.

Brent, the international oil marker, hit $41 a barrel earlier this week and on Friday the benchmark was just shy of that level.

Attempts by Saudi Arabia and Russia to lead some of the world’s leading producers in an output freeze agreement have helped put a floor under prices. Supply outages in Iraq, Nigeria and the UAE, the IEA said, also helped.

However, there are doubts that a deal will be struck, with Iran unlikely to back any agreement that forces it to restrict production as it tries to re-establish higher exports after years of sanctions.

Although lower than the 500,000 b/d targeted by Tehran, the IEA said Iran had increased output by 220,000 b/d in February to 3.22m b/d. The resumption of crude oil sales to Europe and more deals in Asia helped it push crude oil exports above 1.4m b/d from about 1.15m b/d before restrictions on Iran’s oil industry were eased in January. Iran exported about 2.2m b/d before 2012.

“It appears that Iran’s return will be gradual,” the IEA said.

The US remains the major source of production declines in 2016, with production expected to fall 530,000 b/d this year as US shale companies slash spending. US oil production increased from around 5.5m b/d to almost 10m between 2010 and 2015, leading Opec and its de facto leader Saudi Arabia to increase output in an attempt to maintain market shares.

Last month, the kingdom’s powerful oil minister Ali al-Naimi warned shale drillers to trim costs or go bust. Some US producers have responded to the recent uptick in prices by moving to hedge future production.

The agency left its demand growth forecast for 2016 unchanged at 1.2m b/d, driven by India and smaller Asian economies. China, which was the pillar for global oil demand for the last decade, will see growth of 330,000 b/d this year. This compares with an average of 440,000 b/d for the last 10 years.

The IEA cautioned that any further rises in oil prices could damp demand growth. “The foundations for global demand growth are sound, but not rock-solid,” the IEA said.

The oil collapse has benefited organisations such as consumer companies — from airlines to refiners — and also certain countries. But exporter nations have seen their budgets shredded, while oil groups have had to slash costs and lay off staff amid a cash crunch.