IEA says oil price recovery 'may not be imminent'

Says rebalancing may begin in the second half of the year

Oil prices may have further to fall and a rebound could take some time, despite increasing signs that the downtrend will end, possibly in the second half of this year as North American supply growth slows, the West's energy watchdog said on Friday.

Oil prices have fallen almost 60% over the last six months with both of the world's crude oil benchmarks now trading below $50 a barrel as supplies of high quality, light oil from the United States and Canada have overwhelmed demand at a time of lacklustre global economic growth.

The International Energy Agency (IEA) said in its monthly oil market report that inventories would continue to build throughout the first half of this year, but eventually lower oil prices would begin to curb supply and help boost demand.

"How low the market's floor will be is anybody's guess. But the sell-off is having an impact," the IEA said. "A price recovery - barring any major disruption - may not be imminent, but signs are mounting that the tide will turn."

"A rebalancing may begin to occur in the second half of the year," said the agency, which advises major industrialised countries on energy policy.