Energy body increases oil demand forecast

The International Energy Agency increased its forecast of global oil demandforthis year and next on Thursday.

The agency, which advises 28 nations, is now predicting world demand to come in at 84.5 million barrels a day in 2009, it said in its monthly oil report. That's less than the amount used in 2008, before the full effects of the economic downturn had been felt butroughly 500,000 barrels more than it was previously predicting.

The agency also predicts global demand to hit 85.7 million barrels a day next year, a 1.5-per-cent increase over its new2009 forecast.

The agency cited increased consumption in China and the United States in justifying the hike. It's the second straight month that the agency has slightly increased its demand forecast.

On Wednesday, the Organization of Petroleum Exporting Countries met in Vienna to discuss output levels and price targets. "Discussions on better compliance [are] seemingly more likely than a further target cut," the IEA said of the OPEC meeting.

The fractious group often struggles to adhere to its self-imposedtargets. It has a stated target of producing 4.2 million fewer barrels per day this year, in an attempt to boostcrude prices. But OPEC nations produced 26.3 million barrels per day in August,1.4 million barrelsmore than its own target, the IEA noted in its report.

The IEA did not alter its estimates of output from non-OPECnationsin2009 and 2010. Non-OPEC nations are expected to produce 51 million barrels per day in 2009 and 51.5 million barrels per day next year.