Greater oil demand seen for 2009

Oil prices have surged since hitting a low of $32 a barrel in December

Demand for oil this year will be more than previously expected, according to the International Energy Agency (IEA).

The IEA said in its monthly survey that oil consumption would now drop by 2.9% to 83.3 million barrels a day.

The body had expected a 3% annual decline this year, the biggest drop since 1981.

The higher forecast, the first increase in the IEA's expectations in 10 months, may add to signs that the worst of the global recession is over.

"These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," the IEA said.

The report came as oil prices rose above $72 a barrel, close to an eight-month high.

US light sweet crude rose by $1.55 to $72.68. London Brent crude rose slightly to $71.79.

The price of oil has more than doubled this year.

It touched lows of about $32 a barrel in December, but is still nowhere near the all-time high of $147 reached in July last year.

On Tuesday, the US Energy Department's Energy Information Administration predicted that oil prices would average $67 a barrel in the second half of 2009. A month ago, its forecast was $55.