Oil rose toward $72 a barrel on Thursday, supported by OPEC's decision to hold output steady and forecasts by the International Energy Agency that global demand will be higher this year and next than it previously forecast.

Equity markets rising to 11-month highs, although they later pulled back, and a fall in U.S. crude oil inventories helped oil rally for the fourth day running.

U.S. crude rose 45 cents to $71.76 a barrel by 1130 GMT (7:30 a.m. EDT). London Brent crude rose 28 cents to $70.11.

The big change in the IEA report was that they made a pretty big upward revision for demand, Mike Wittner, Societe Generale's global head of oil market research, said.

But Wittner said the price rises were limited ahead of the release of the U.S. government weekly oil data later on Thursday.

Global oil demand will be almost half a million barrels per day higher than previously forecast this year and next on stronger-than-expected U.S. and Asian fuel consumption, the International Energy Agency said in its oil market report on Thursday.

The year-on-year decline will diminish as we go through the end of 2009, and then from early 2010, we will begin to see year-on-year growth in global demand, David Fyfe, head of the IEA's oil industry and market division, said.

The IEA report followed U.S. oil industry data on Wednesday showing a significant fall in crude oil inventories.

OPEC POLICY

As widely expected, at a meeting that ended early on Thursday, the Organization of the Petroleum Exporting Countries saw no need to change production formally, although some OPEC members called for stricter compliance with existing curbs.

Ali al-Naimi, the oil minister of Saudi Arabia, said oil prices were being driven by economic recovery.

The lack of more aggressive action reflected a belief that demand will be sufficient in pulling down the overhang in the market, David Kirsch, director of market intelligence services at PFC Energy in Washington, said.

Industry data from the American Petroleum Institute showed a 7.2 million barrels drawdown in the week to September 4, far more than the 1.5 million barrels forecast in a Reuters poll.

The market focus will shift to another set of weekly oil data from U.S. government body Energy Information Administration, due out at 1500 GMT (11 a.m. EDT).

(Additional reporting by Nick Trevethan in Singapore; editing by Sue Thomas)

OPEC