Oil fell below $57 a barrel on Friday after the International Energy Agency said a global oil glut was building and US oil production showed no signs of slowing yet.

The IEA, which advises industrialised countries, said in its monthly report the United States may soon run out of empty tanks to store crude, which would put additional downward pressure on prices.

Brent crude was down 62 cents at $56.46 by 1141 GMT. U.S. crude was down 81 cents at $46.24.

"US supply so far shows precious little sign of slowing down," the IEA said. "Quite to the contrary, it continues to defy expectations."

While Opec output declined in February, global supply was up 1.3 million barrels per day (bpd) year-on-year at an estimated 94 million bpd, led by a 1.4 million bpd increase from non-Opec producers, the IEA said.

"The market will be more balanced in the second half, but there is still a massive oversupply in the first half," said Barbara Lambrecht, analyst at Commerzbank in Frankfurt.

"We still expect oil prices to fall in the coming weeks due to rising inventories," she added.

News of a deal to end a strike by US refinery workers helped support oil as it could help to increase demand for crude oil for processing in the world's biggest oil consumer.

The deal could reduce US crude stockpiles, which climbed last week to the highest level for this time of year in more than 80 years.

Still, forecasts of a tighter market to come may have to be revised should a deal be reached over Iran's nuclear work that allows Iranian oil exports, now limited by sanctions, to increase.

Iran and six world powers are aiming to complete the framework of a nuclear agreement by the end of March and reach a full agreement by June 30.

The six powers have begun talks about a United Nations Security Council resolution to lift UN sanctions on Iran if a nuclear agreement is struck, Western officials said.

"Global supply and demand turns tighter in the second half but a question mark for the second half remains Iran and the answer to that is expected to come in over the next two weeks," said Olivier Jakob, analyst at Petromatrix.

Investors also kept an eye on developments in Libya, where most oil production has been kept off line by fighting. - Reuters