The International Energy Agency Friday said it expects world oil demand in 2010 to resume trend growth seen earlier this decade, a bullish call, as economic activity advances in the second half of the year.

The Paris-based agency, in its monthly oil market report, said world crude consumption this year is expected to clock growth of 1.8%, or 1.6 million barrels a day, with all of that increase coming from emerging markets like China . Total demand is seen averaging about 86.6 million barrels daily.

"We are seeing demand growth back on trend level that we saw earlier this decade," said David Fyfe, who edits the IEA report. The forecast represents a slight upward revision from January of 70,000 barrels a day.

The agency, an energy watchdog for big consuming nations like the U.S. , said world oil demand started growing again in the fourth quarter after dropping five straight quarters.

The IEA has been among the more bullish forecasters in the oil market. Other analysts think issues like the fading effects of government stimulus programs, weak lending by banks and economic problems in Europe will thwart consumer activity and retard global oil demand growth to just around half the rate the IEA is currently projecting.

Crude prices Friday in New York traded up around 10 cents at $82.50 a barrel at 0915 GMT, as dealers mull whether prices can retest a 15-month high of $83.95 a barrel hit last month on optimism about economic recovery.

Prices recently have also gotten support from a gradual drawdown of unused oil packed away on tankers, an indication demand is picking up. The IEA said short-term floating storage of crude oil stood at 52 million barrels at the end of February, down from almost 90 million barrels last spring and from 59 million barrels in January.

This drawdown of floating storage has come amid a narrowing in recent weeks of the contango, the staircase-like pricing structure has made it profitable for months for dealers to buy and store crude amid otherwise weak crude demand.

One reason for the narrowing of the contango, in which near-term oil contracts trade at a discount to contracts farther into the future, is rising demand that is encouraging tanker-owners to bring their product to onshore customers.

The IEA though said global supply remains ample, highlighted by output from the Organization of Petroleum Exporting Countries', whose production hit a 14-month high in February.

In terms of forward demand cover, another measure of the health of supply, oil stocks in developed nations like the U.S. rose to 59.2 days in January from 58.3 days in December, the IEA said.

The growth in crude production from non-OPEC suppliers like Russia this year was revised up 200,000 barrels a day from January. Non-OPEC supply, accounting for about 60% of world demand, is seen growing by a total of 300,000 barrels a day, which is just about half the rate seen over the past 15 years.

Sluggish non-OPEC supply growth is one of the reasons many oil traders expect crude prices to head higher as economic activity returns to more normal levels in the years ahead.

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