OPEC, the oil producers’ cartel, said today that the worst appeared to be over for the oil market, despite demand continuing to shrink.

“In light of the considerable challenges the world economy and commodity markets, particularly the oil market, have undergone, the worst appears to be behind us,” the Organization of the Petroleum Exporting Countries said in its monthly oil market report. “As the world economy stabilises, the world oil demand appears to be settling down.”

“Industrial production activities are steadying and in some parts of the world have even improved slightly. This should stop the bleeding in oil demand. There are no significant downward revisions to our previous oil demand forecasts,” it added.

The group’s comments come after the price of oil hit an eight-month high above $73 a barrel last night amid growing optimism that the world economic outlook is starting to improve.

However, Alistair Darling today sought to dampen hopes of an early end to the recession, arguing that high oil prices could hold back recovery. In an interview with the Financial Times the Chancellor said the volatile oil price, which hit a record high of $147 a barrel last July before plummeting amid the recession, had “the potential to be a huge problem as far as the recovery is concerned”.

OPEC said it believed its efforts to curb excess supply had helped turn the market around and would reduce global oil inventories.

The cartel’s more upbeat forecast is in part due to increasing demand from China, which it said was growing for the first time since the start of the year, and strong demand from India and Brazil.

However, OPEC cautioned that oil demand from America remained a “wild cart” and that if demand weakened in the country, the world’s biggest oil consumer, it would have an impact on the total world oil demand.

OPEC estimated that demand would contract by 1.62 million barrels per day or 1.89 per cent in 2009, only a slight reduction from its forecast of a 1.83 per cent decline last month.

Earlier this week, the US Energy Information Administration and the International Energy Agency slightly raised their demand estimates after months of downward revisions.

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