The International Energy Agency forecast on Wednesday the world oil demand this year will grow by 2.2 percent instead of the 2.1 percent in predicted last month.

"The oil market is still rebalancing from last year's demand surge," the IEA said in its monthly report.

It said that demand pressures in China and the United States had continued to ease, and that it had revised downwards its estimate of demand in Europe, but consumption in some other regions had risen.

Demand by countries in the Pacific, the rest of Asia, the former Soviet Union and the Middle East had increased, said the report.

The rise in US stocks, coinciding with high prices, was prompting the widest divergence in opinions about the established relationships between stocks and prices, the IEA said.

"Some see the co-existence of high prices and high US stocks as a speculative phenomenon, others as a harbinger of pending price weakness. Others, including ourselves, see it as both a cyclical and a regional issue," it said.

The agency raised the possibility of a rapid tightening of the US crude market, "particularly if currently unfavorable price differentials continue to hamper imports". Overall, world demand for oil in the first quarter of 2005 seemed to have been slightly less strong than had been expected, rising by 1.83 million barrels per day or by 0.29 million barrels less than forecast.

The IEA also expected growth of demand to slow to 1.7 million barrels per day after an increase of 2.4 million barrels per day in the fourth quarter of last year.

However, the IEA conditioned this by saying that events depended on the severity of the weather and the strength of growth of the US economy.

On the supply side, the IEA said that supplies had risen by 0.435 million barrels per day in April from the March figure to 84.5million barrels per day.

Members of the Organization of Petroleum Exporting Countries had increased their output by 480,000 barrels per day to 29.4 million barrels.