THE International Energy Agency (IEA) has upgraded its global oil demand forecasts, pointing to improvements in the world economy but warned that the recovery would slow down and could even die out by next year.
The monthly report from the IEA came after Ministers from the Organisation of the Petroleum Exporting Countries (OPEC) agreed to hold oil outputs amid signs of economic recovery.
OPEC also expressed "grave concern" about the scale of the recovery.
The IEA revealed that it was revising its forecasts for oil demand in 2009 and 2010 because of unexpected strong economic signals from China and the United States; two of the world's biggest energy consumers.
It also stated that oil demand in the major developed economies of the world remained far lower than the previous year, adding that the prospect of another wave of recession next year �cannot be entirely discounted.�
The IEA, the energy and oil-monitoring arm of the Organisation for Economic Cooperation and Development (OECD) in Paris has been more cautious in its previous two months report about excessive optimism over a global economic recovery.
Recent signs of the global economy recovery have prompted the IEA to revise its oil demand forecasts from nearly 0.5 million barrels of oil per day to 84.4 million per barrel (bpd) for 2009 and 85.7 million bpd for 2010.
The raised forecasts pushed up oil prices; with New York's main contract and light sweet crude for October delivery jumping 1.12 dollars to 72.43 dollars a barrel, while Brent North Sea crude for October rose 82 cents to 70.65 dollars.
The IEA said non-OPEC output was holding up because of higher prices and growing optimism about a global economic recovery.
The IEA also warned of the prospect of a fresh bout of recession next year.
�The spectre of a double-dip and 'W-shaped' recession could undermine oil demand growth next year and cannot entirely be discounted,� the report stated.
Experts warned that a winding down of stimulus programmes, a weak financial sector and rising unemployment could drag countries back into recession.
The report also stated that the rebound in global oil demand was due to a rise in demand from non-OECD countries.
OECD consists of 30 developed countries but does not include the major emerging economies such as Brazil, China, India and Russia.
Oil demand was 4.9 percent lower in July on a 12-month comparison in North America and was 5.6 per cent lower in Europe in the same month, the IEA confirmed.
In China, oil demand rose by 5.8 percent over 12 months in July - marking the fourth month running of strong oil demand in the Asian powerhouse.
The IEA said the growth in China was partly due to government-induced economic rebound and high levels in the stockpiling of oil products that �distorted� the demand picture.
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