Despite high crude oil prices, world oil demand will be "robust" and grow at a strong 2.5 percent average annual rate for this year and again in 2006, the Energy Information Administration (search) said Tuesday.

In its monthly energy forecast, the Energy Department's (search) analytical arm revised upward its estimate for global oil demand this year by 300,000 barrels per day (bpd) to 85.0 million bpd.

For 2006, the EIA expects oil demand to also be 300,000 barrels per day higher than previously forecast and average 87.0 million barrels per day.

Still, the growth in oil demand for this year and next will be lower than the 3.4 percent growth rate seen in 2004. Global oil use averaged 82.8 million barrels per day last year, an increase of 300,000 barrels per day in a revision issued by the EIA in its monthly report.

Rising Chinese oil demand will contribute to overall world growth in petroleum use over the next two years, the EIA said.

To help meet demand, the Organization of Petroleum Exporting Countries (search) will have to supply more crude because the supply from non-OPEC oil producers "is not expected to accommodate incremental worldwide demand growth," the agency said.

Non-OPEC oil supply is forecast to increase by just 800,000 barrels per day this year and during 2006, below the annual growth rate seen from 2002 through 2004, the EIA said.

But Saudi Arabia, OPEC's only member with significant spare capacity, must "steeply discount their heavy oil in order to market it effectively," the EIA said.

For the U.S market, the agency said it expects oil demand in the upcoming third and fourth quarters will be 210,000 barrels per day and 240,000 barrels per day higher than previously forecast.

Demand will be higher even as crude oil costs rise.

U.S. monthly average crude oil prices are expected to stay above $55 a barrel for the rest of this year and through 2006, the EIA said.

For the entire third quarter, U.S. oil should average $59.17 a barrel, up from the EIA's prior forecast of $52.83.

High crude oil costs will help keep the quarterly average price for retail gasoline above $2.20 a gallon through 2006. The average price for gasoline this summer, which runs from April through September, should average $2.25 a gallon, up 8 cents from the EIA's projections last month.

The new report made no changes to the EIA's estimates of China's oil demand in the second half of 2005, and for all of 2006. The agency repeated it expects China to consume 7.8 million barrels per day in 2006, compared to 7.2 million barrels per day in 2005.

"Chinese demand growth, which averaged about 1 million barrels per day in 2004, is projected to be slower but still robust," the EIA said.