RUNAWAY demand for oil is finally slowing down, according to the latest bulletin from the International Energy Agency (IEA).

The organisation said that was partly because countries such as China and Russia had put the brakes on soaring economic expansion.

That in turn led to the IEA knocking 50,000 barrels a day off its global-oil-use forecast for this year, taking the figure to 84.3 million barrels per day.

Shift

But that is still higher than the 84.2 million bpd supplied in March, which was itself 365,000 bpd more than was used in February.

The massive demand for oil to help drive economic growth in countries like China, Russia and India had taken oil prices to record highs of just over dollars 58 per barrel last week - although they have since retreated slightly.

But the latest report from the organisation - which advises 26 energy-consuming nations on oil policy and is an offshoot of the Organisation for Economic Co- operation and Development (OECD) - appears to mark a shift from a two-year period when the IEA and other oil market analysts have been forced repeatedly to raise demand forecasts as consumption outstripped expectations.

"From the demand side, it would appear that the risks are, for the first time in two years, edging towards the downside," the IEA wrote in its monthly Oil Market Report.

"Interest rates are moving in an upward path in strong growth countries, particularly the US, acting along with high oil prices as an economic drag."

And the downward revision contrasts with the IEA's March report which said global demand for oil was set to outpace previous expectations. The beginning of 2005, however, has added to the slowdown seen over the past year in China.

In the first two months of this year, Chinese demand growth slowed to 5.4 per cent, sharply below the 20.8 per cent growth at the same time last year, the IEA said.

The Paris-based organisation said it was too early to say what future oil consumption in the Far East powerhouse would be, as economic growth was still strong. However, it said "fears of a surge in second-quarter Chinese demand are receding", adding that a repetition of the extraordinary year-on-year growth rates seen in China in the first half of 2004 was "unlikely".

The IEA left projected Chinese oil demand growth for the full year unchanged at 500,000 barrels per day (7.9 per cent), down from 860,000 bpd (15.6 per cent) for 2004.

The IEA's report also revised annual world demand growth down slightly by 50,000 bpd, though it said cold weather had lifted year- on-year demand in OECD countries by 1.28m barrels per day in February.

Oil supplies are growing and stocks in industrialised countries are higher than last year, the group added.

The IEA said that commercial oil stocks in industrialised nations fell by 39 million barrels in February to 2.57 billion - but that was still 96 million barrels higher than a year ago.

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