The International Energy Agency said that world oil consumption will increase less quickly than expected this year and next as the pace of global economic growth slows.

In its monthly oil market report, the Paris based agency said that financial and economic headwinds were gathering momentum and the oil market supply demand balance could ease in the short term if recent supply disruptions receded.

Mr David Fyfe head of the IEA's oil industry and markets division said that “It is possible that we could see an easing in the tightness of the market in the months ahead.”

The IEA cut its estimate of global oil demand growth this year by 160,000 barrels per day to 1.04 million barrels per day and trimmed its 2012 demand growth estimate by 190,000 barrels per day to 1.42 million barrels per day.

The agency, which advises industrialized countries on energy policy now sees world oil demand rising to 89.28 million barrels per day this year increasing to 90.69 million barrels per day in 2012.

The Organization of the Petroleum Exporting Countries and the US government Department of Energy have also both cut their forecasts for global oil demand growth this month.

The IEA raised its forecast for Libyan crude oil production capacity by the end of this year and said OPEC oil output had also risen helping increase industry inventories in the developed industrialized economies.

(Sourced from Reuters)