"Growth in world oil demand appears to have stalled in September and October," the IEA said in its Monthly Oil Market Report.

"A substantial part of the demand decline is attributable to slower than expected economic growth."

Weakening demand, particularly in Asia's financially troubled "tiger" economies, has spurred this year's 40 percent oil price slide.

But the Paris-based agency's report said the latest demand weakness was not just in Asia but was spread across many of the member nations of the Organisation for Economic Co-operation and Development.

The IEA retained a projection that world oil demand next year would grow by an estimated 1.4 million bpd or 1.9 per cent.

But it said global demand growth in September was a meagre 0.4 per cent and in October demand fell a startling 2.3per cent below that of a year earlier.

Global demand in the fourth quarter was projected to be flat at 75.7 million barrels per day (bpd), a downward revision of 650,000 bpd.

To make matters worse, world oil production rose by 800,000 bpd to 75.01 million bpd in November, IEA figures showed. And output from the Organisation of the Petroleum Exporting Countries rose to 27.34 million bpd. This represented 81 per cent compliance with targeted cutbacks, excluding Iraq which is not participating in supply restraint.

Oil exports from the territories of the former Soviet Union remained high in November averaging 3.16 million bpd. It said Russian refiners and exporters had continued to take advantage of the rouble devaluation.

Stock levels remained high compared to last year and even higher compared to October 1996 levels, it said. Stocks in OECD member countries fell by only 90,000 barrels per day in October due to warm weather in all OECD regions.

One Prime determinant of demand, lower prices, wouldnormally have been expected to stimulate demand but they had had failed to do some because of huge stocks, warm weather and slow economic growth.

But the IEA said potential bullish factors should not be forgotten, including the possibility of a cold winter, Iraqi supply disruptions and slowing Russia exports.

"A combined loss of as much as one to two millilon bpd, on top of the one million bpd seasonal stockdraw, could quickly change the mood of the market," it said.

"The underlying supply-demand conditions obviously are weak. But the factors that caused and sustained the price collapse are dissipating."

A recent European cold snap was a reminder of what winter can be like, non-Iraqi Opec output was almost two million bpd lower than at the start of the year and while Asian demand is was not getting better, it was not getting any worse.

"What has not gotten much better is the stubbornly high level of oil inventories, both within OECD countries and elsewhere," it said.