The Organization of Petroleum Exporting Countries projected that world oil demand would grow by 800,000 bpd in 2010 after declining 1.4 million bpd in 2009.

The oil demand growth estimate is predicated on the global economy growing by 3.1 percent this year, with China and India expected to lead the way.

In fact, the oil consumption decline in developed countries making up the Organization of Economic Development and Cooperation or OECD is expected to moderate as economic activity picks up, OPEC said in its January Oil Market Report.

OPEC said oil demand growth in non-OECD this year will rise to 1.0 million bpd from 500,000 bpd last year.

On supply, OPEC said non-OPEC oil supply growth in 2009 is estimated at 500,000 bpd, broadly unchanged from the previous assessment. In 2010, non-OPEC oil supply is expected to increase by 400,000 bpd to average 51.3 million bpd in 2010, following an upward revision of 42,000 bpd. The adjustment came partially from the U.S. and Russia on the back of healthy production in the fourth quarter of 2009.

In December, total OPEC crude production averaged 29.4 million bpd, the highest level in 2009, indicating an increase of 78,000 bpd over the previous month.

OECD commercial oil inventories rose 12.6 million bbl in November to stand around 93 million bbl above the five-year average. This represents 59.8 days of forward cover. Preliminary data for December shows a stock draw of 34 million bbl driven by the drop in U.S. crude and products.

However, the surplus over the five-year average remains above 90 million bbl. U.S. commercial oil inventories fell 39.1 million bbl with both crude and products declining by 10.4 million bbl and 28.7 million bbl respectively. Despite this draw, U.S. commercial oil inventories remained 46 million bbl above the five-year average.

OPEC said that a cold winter, economic recovery and a low base for the previous year returned oil demand growth to positive territory by the end of 2009.

The recent cold snap across the globe, along with increasing seasonal demand and product stock draws have underpinned product market sentiment and lifted crack spreads and refining margins, especially in the U.S. and Europe.

Should the cold weather persist, the overhang of middle distillate barrels would be partly mitigated, providing some relief to refiners in the coming weeks, the cartel said.

However, the sustainability of recent developments in product markets and the positive impact on crude fundamentals and prices will largely depend on economic growth in the future.