Global oil demand is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel increase compared with agency's last report.

For 2009, global demand is expected to come in at 84.9 million bpd, down 1.5% year-on-year but 50,000 barrels higher than the last forecast.

In its latest January forecast, the IMF now expects global economic activity to rise by 3.8% year-on-year, up by 0.8 percentage points or almost a quarter versus the October assessment, the IEA said in its Monthly Oil Market Report, released this morning.

"However, should global economic growth in 2010 fail to live up to expectations, oil demand could be around 400,000 bpd lower," warned the agency.

Growth comes entirely from non-Organisation for Economic Co-operation & Development (OECD) countries and higher demand readings from China and Asian countries, the agency said.

Demand in non-OECD is now forecast to increase by 4%, while stagnating at 2009 levels in OECD countries.

Meanwhile, oil price projections for 2009 and 2010 were revised up $1 and $4 respectively, to $58 per barrel and $75 per barrel.

“The higher price, combined with persistently weak preliminary oil demand data for OECD economies, partly counterbalances these (gross domestic product) changes,” the IEA said.

Global oil supply fell 45,000 bpd to 85.8 million bpd in January, with higher total Opec output offset by lower non-Opec production.

The agency revised average 2009 non-Opec production up by 70,000 bpd to 51.4 million bpd while this year's supply was revised up by 120,000 bpd to 51.6 million bpd on slightly improved US and North Sea crude prospects.

Yesterday, US agency EIA also pushed up its forecast for global liquid fuels consumption.

It revised its outlook up by 1.2 million bpd in 2010 to 85.3 million bpd and up by 1.6 million bpd in 2011 to 86.86, after showing annual declines in 2008 and 2009.

Published: 11 February 2010 09:00 GMT  | Last updated: 12 February 2010 09:45 GMT