The International Energy Agency has slashed estimates of an oil oversupply in the coming months, while maintaining consensus that the oil market is likely to rebalance in 2017, given that demand for the energy commodity remains strong ahead of production.

According to data revealed by the energy authority, the surplus in the first half of 2016 is almost 40 percent lower than what was estimated a month ago, as consumption has boosted compared to earlier levels. Also, disruptions in Paris and other global disturbances have reduced supply, albeit at a negligible rate.

Oil prices in New York have surged about 80 percent from a 12-year low in February to trade near USD48 a barrel as production retreats amid investment cuts, wildfires have disrupted operations in Canada. Also militant attacks have hit exports from Nigeria, Bloomberg reported.

Supplies of oil have outpaced that of demand by almost 800,000 barrels per day during the second half of 2016, falling behind the 1.3 million bpd estimated in the last month’s report. The Paris-based energy agency further added that the projected re-balancing of global crude oil market may be delayed if output re-bursts in Canada, Nigeria and Libya.

However, growth in demand from non-OPEC can posit threats of instability to the global oil market. The organization will be required to produce 33.5 million barrels of oil per day, on an average, next year. Iran, now the fastest-growing OPEC member may boost output by 100,000 barrels a day next year to 3.7 million a day as it restores exports curbed by international sanctions, reports confirmed.

Meanwhile, the agency has raised forecasts for global oil demand by 100,000 barrels a day on higher fuel use in the US and cut projections for non-OPEC supply by the same amount. Global oil supplies suffered first significant contraction last month since 2013, falling 590,000 barrels a day from a year earlier as a result of curbs imposed on spending and unplanned outages.