Oil demand growth falls to its lowest level in years as the global economy slows.
Over the next five years, the U.S. will take aim at becoming the top oil exporter, the agency said.
The International Energy Agency warns that U.S. shale production could complicate OPEC's efforts to restrain output.
After predicting last month the market would return to balance, the agency now says that forecast may have been premature.
The International Energy Agency says the oil glut is clearing out even as OPEC producers pump at record or near record levels.
Prices have risen to more than $40 a barrel in recent days amid a drop in both OPEC and non-OPEC production.
The oil markets could be left with a surplus of 1.5 million barrels a day in the first half of 2016, says the IEA.
While it won't be a smooth market adjustment, the price of oil should hit $80 per barrel in less than five years, says the IEA.
An International Energy Agency forecast is the gloomiest for U.S. oil production since crude prices crashed last month.
The International Energy Agency says a "rebalancing" between supply and demand is under way but it will be a lengthy process.
Robust U.S. oil production and other factors are causing crude inventories to soar, setting the stage for another drop in oil prices.
The price of oil has been tumbling. The cost of finding it has not.
