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By Grant Smith

Oil prices may fall further as the world remains “massively oversupplied,” before markets tighten in 2016 when output growth outside OPEC grinds to a halt, according to the International Energy Agency.

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There will be no overall production growth outside the Organization of Petroleum Exporting Countries next year for the first time since 2008, according to the IEA. Growth in U.S. shale oil supplies will stagnate to the middle of 2016 while output declines in Russia, the Paris-based adviser said in its first detailed assessment of the year ahead. Global oil demand growth will slow, the agency predicted.

Oil-producing nations around the world are reeling after OPEC initiated a strategy in November to defend its share of global markets by pressuring rivals to curb output. Oil prices, about 45 percent lower than a year ago, may need to decline further to reduce the supply surplus, the IEA said.

“The bottom of the market may still be ahead,” said the agency, which advises 29 industrialized nations on energy policy. “Non-OPEC supply growth is expected to grind to a halt in 2016 as lower oil prices and spending cuts take a toll.”

Brent crude futures, a global benchmark, pared gains after the report. The August contract traded 9 cents higher at $58.70 a barrel at 1:49 p.m. on the London-based ICE Futures Europe exchange, having earlier risen as much as $1.05. The grade has lost 13 percent from this year’s peak in May.

This chart shows the International Energy Agency’s forecast of world oil demand.[/caption]

Global oil demand growth will slow next year to 1.2 million barrels a day — reaching 95.2 million a day — down from an expansion of 1.4 million a day this year, according to the report. The increase in consumption peaked in the first quarter, temporarily boosted by an unusually cold European winter.