The IEA also today released its latest World Energy Outlook, in which it said global oil demand will fall modestly due to the rise in electric cars.
US oil prices have risen above $55 a barrel recently amid geopolitical tensions overseas, supply disruptions and an anticipated extension of OPEC's production cuts next year.
"The recent price support, namely the tension in the Middle East, has been swept aside as rising rig counts and US shale output (are) in the focus of traders", PVM Oil Associates analyst Tamas Varga said.
"The oil market should be able to find a longer-term equilibrium, with the oil price in a range of $50-70 a barrel", the agency said.
"The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market", Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London.
The largest disruptive force to supply will be shale production in the USA - the IEA estimates United States crude oil will reach peak output in the 2020s of around 17m bpd.
"This is the equivalent of adding another China and India to today's global demand", the IEA said in its report.
This sentiment comes in part on the back of rising USA oil output C-OUT-T-EIA, which has grown by more than 14 percent since mid-2016 to a record 9.62 million bpd.
In Abu Dhabi on Monday, the UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei, said that oil producers were expected to unanimously extend a production cut accord later this month, but its duration was still under discussion. This latest move comes as investors expect figures to show U.S. oil production has risen.
After an upbeat performance last week, oil prices edged lower for a second day Tuesday.
The International Energy Agency on Tuesday delivered a more cautious outlook for oil demand. The IEA estimates that there will be 50 million electric vehicles on the road by 2025 and 300 million by 2040, from closer to 2 million now.
"It's quite spectacular, because you're going to see the number of cars on the road globally double from 1 billion to 2 billion, thanks to electric vehicles and fuel economy standards", said Laura Cozzi, head of the Energy Demand Outlook division.
"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.