The International Energy Agency (IEA) released its Medium-Term Oil Market Report (MTOMR) on Monday. The agency said that the oil market will rebalance in 2017 as the U.S. oil output is expected to decline.

"Only in 2017 will we finally see oil supply and demand aligned but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices when the market, having balanced, then starts to draw down those stocks," the IEA noted.

The agency expect the U.S. oil output to fall by 600,000 barrels per day (bpd) this year and by 200,000 bpd next year, while the oil output is forecasted to reach 14.2 million bpd from 2015 to 2021.

Iran's oil production is expected to climb by 1 million bpd to 3.9 million bpd by 2021.

The global oil supply is expected to rise by 4 million bpd between 2015 and 2021, while global oil exploration and production capital expenditures (capex) are forecasted to drop 17% in 2016, after a 24% fall in 2015.

The IEA expects the global oil demand to increase at an average rate of 1.2 million bpd through 2021.