The OPEC cartel on Thursday revised down its expectations of oil demand growth for next year and projected a rare big winter stockbuild if the group keeps producing at current levels.

The group estimated likely demand for its oil to average 28.2 million barrels per day (bpd) over the fourth quarter this year and first quarter 2005, some 2 million bpd below its estimated October production, the group said in its monthly Oil Market Report (search).

The figures imply an unusual increase in inventories at a time when heating demand will be peaking during the northern winter. Last year world oil stocks fell 350,000 bpd in the same period.

Slowing demand growth in China will hasten the stockbuild, the report said. OPEC (search) lowered its estimate of world demand growth next year by 120,000 bpd to 1.49 million bpd.

"World oil demand growth estimates for next year have once again been adjusted to account for the lower rate of global economic growth," the report said. "China remains the wild card for oil demand growth next year."

OPEC has been pumping at its highest level for 25 years to meet rising global demand and the cartel raised production another 78,000 bpd in October to 30.23 million bpd on higher supply from top world exporter Saudi Arabia, the report said.

Fears of a big stockbuild in the first half of this year spurred OPEC to reduce output, before dramatic Chinese demand growth subsequently strained supplies far more than expected and sent prices rocketing.

OPEC's output surge has now helped replenish crude inventories in consuming nations and bring prices down around 17 percent from record highs over the last three weeks. U.S. crude was down 94 cents at $45.90 a barrel on Thursday.

The winter stockbuild projected by OPEC is even wider than the International Energy Agency's (search) forecast last week of a 1.65 million bpd increase through to end-March if OPEC keeps pumping at current rates.

OPEC ministers will use the report to help them set supply policy at the group's Dec 10 meeting in Cairo.

The 10 OPEC members with quotas have been pumping 1 million barrels per day above a 27 million bpd ceiling that came into force from November 1, the report said.

Iran's Oil Minister on Wednesday said that oil markets were oversupplied, the first sign of unease over falling oil prices.

Prices have fallen especially hard for the group's heavy, high-sulphur supplies which are harder to process into transport and heating fuel.

OPEC's reference basket of crude oil has fallen even faster in value than the international benchmarks, dropping to a four-month low of $35.49 a barrel — more than $10 below U.S. crude, compared to a $3 deficit in July.

"The tendency to concentrate on U.S. crude may make current prices still seem high, while looking at the world through the prism of the OPEC basket makes them seem far more moderate," said Paul Horsnell of Barclays Capital.

Swelling crude oil supplies on physical markets have sent prices for prompt crude below forward supplies — a market structure known as contango (search) which makes it profitable for companies to hold stocks. OPEC has in recent years reined in supply to head off contango.

A lack of capacity in industrialized nations to process OPEC's low-quality crude into transport and heating fuel has helped buoy prices, despite the surge in output. Heating oil stocks are below normal in all major consuming regions.

"The limited flexibility of refineries to process heavy crudes has placed a relatively high floor on prices," the report said.