NEW YORK, Feb. 22 (UPI) -- The expected decline in U.S. crude oil production boosted market sentiments of a return to balance, pushing crude oil prices sharply higher Monday.
The International Energy Agency said in a report published Monday it revised its total global output forecast lower. In a midterm market report, the IEA said 4.1 million barrels of oil will be added to the global market between now and 2021. That's significantly lower than the 11 million bpd added in the six-year period ending in 2015.
In the United States, which in part helped pushed markets toward the supply side, IEA said oil production reaches its peak of 14.2 million bpd by 2021, but short-term output fades through 2017 under pressure from low crude prices.
Brent crude oil prices moved up by about 5 percent in early Monday trading to start the day in New York at $34.68 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, moved back above the psychological threshold of $30 per barrel to rally 6.4 percent to $31.54 per barrel.
U.S. shale oil production has so far been resilient despite pressure from lower crude oil prices. Oil production in North Dakota, the No. 2 oil producer in the country, is down about 6 percent from last year.
Monday's report is not the first prediction of a decline in U.S. output from the IEA. In November 2014, when oil was selling for around $80 per barrel, the IEA warned growth in U.S. shale oil production "levels off" by the next decade and Middle East producers once again take the lead as the major source of new oil supplies.
The rally in crude oil prices comes despite warnings from the International Monetary Fund that markets will remain suppressed for the foreseeable future.
"Not only have oil prices fallen by around two-thirds from their most recent peak, but supply and demand-side factors suggest that they are likely to stay low for an extended period," IMF Managing Director Christine Lagarde said during a conference in Abu Dhabi.
Lagarde said it's not only the United States that's pressured by the weak market. Oil exporters in the Middle East and North Africa last year said a combined $340 billion in oil revenue vanish from their budgets last year.