Oil demand rises after price drop, but supply strong: IEA

World oil demand will rise much more than expected this year, the International Energy Agency (IEA) said on June 11, in the latest sign that the collapse in oil prices is helping to boost fuel use.

The Paris-based agency also pointed to "exceptionally high" growth in global supplies, forecasting OPEC crude production would remain near May's multi-year high and boosting its projection of supplies this year from other producers.

In a monthly report, the IEA raised its forecast for global oil demand growth in 2015 by 280,000 barrels per day (bpd) to 1.40 million bpd, bringing demand this year to almost 94 million bpd.

"Recent oil market strength of course partly stems from unexpectedly strong global oil demand growth," said the IEA, which advises industrialized nations on energy policy.

Oil prices have recovered this year after hitting a near six-year low close to $45 a barrel in January. Prices collapsed from $115 in June 2014 in a decline that deepened after OPEC refused to prop them up and chose instead to defend market share.

The IEA's upward revision makes it the most bullish on 2015 oil demand growth of the three government forecasters closely watched by the oil market. The two others - OPEC and the U.S. government's Energy Information Administration - issued reports earlier this week.

Oil initially rose after the release of the IEA report and later slipped. By 0909 GMT on Thursday, benchmark Brent crude was trading at $65.16 a barrel, down 54 cents.

As well as lower prices, economic recovery and a relatively cold winter helped lift demand in the first half of the year, the IEA said. The supportive impact of these factors could wane in the rest of 2015.

"Recent months have seen a steady...