In what can be seen as another setback for the hopes of the oil price recovery crowd, the International Energy Agency (IEA), has warned that the oil market will largely remain oversupplied until the end of the year.

Oil glut to remain in 2016

Keeping in view that the warm winter season across the globe has driven global oil demand growth to a low of 1 million barrels per day in the fourth quarter of 2015, IEA has kept its demand estimate for 2016 as is. The agency is anticipating oil demand of 1.2 million barrels per day.

The development further sparks concerns surrounding a possible oil rebound as OPEC has already refused to move away from full oil production. As a result, Brent crude futures hit a 13 year low at below $30 per barrel.

Some recovery in Brent and U.S. Futures

The IEA noted in its report that the year 2016 will be the third successive year of the oil glut, where supply will exceed the global demand by 1 million barrels per day. The agency has cut its 2016 OPEC crude oil demand projections by 300,000 bpd to 31.7 million bpd.

Meanwhile, Iran is firm on its plan to aggressively increase oil output in a bid to make the most following the lifting of Western sanctions. It is likely to pump in 500,000 bpd additional oil per day.

Amid the various developments, Brent crude futures recovered a bit to $29.89 level. U.S. crude futures traded up by 1.73% to $29.93 a barrel, indicating a rare premium over Brent.

iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) traded up by 2.19% to $5.61 during the previous session.