The comments come on the eve of a summit of leaders from the Organization of Petroleum Exporting Countries (OPEC), with the cartel under pressure to respond to the concerns of consumer countries about near $100 oil.

The IEA, which monitors energy policies in developed countries, lowered its global oil demand forecast for fourth quarter 2007, citing weaker economic activity in the United States, and pointed to an increase of 410,000 barrels a day in OPEC output in October.

"There are ... strong indications that high prices are depressing demand," the agency said in its monthly oil report, "which together with signs of higher output from Saudi Arabia, Iraq and Nigeria, have capped further price gains."

Oil prices fell on Tuesday as traders reacted to the forecasts.

In midday European trade, New York's main futures contract, light sweet crude for December delivery, was down 82 cents at $93.80 per barrel, while in London Brent North Sea crude for December delivery was 76 cents lower at $91.22 per barrel.

But the IEA cautioned that despite its downward fourth quarter demand revision, "supplies are likely to remain constrained through to the end of the year."

"We're pleased to see that supplies are rising. We do think that we need more oil for the coming winter," IEA analyst David Fyfe said.

Demand in China, which together with the Middle East accounts for more than half the growth in global oil appetite, is expected to be robust in response to flourishing economic activity.

The IEA said that a jump in oil prices to a psychologically significant round number - $100 a barrel - may not do any specific "damage" to the path of oil demand growth.

But it said there was nonetheless a "cumulative" effect from a $70-a-barrel rise since 2002.

"The recent dramatic price rise is having a 'short-term' shock effect, at the same time as consumers appear to be adapting behavior to deal with steady annual price increases," the report said.

It noted for example that in the leading industrialized economies, an increase in demand for transportation fuel has been "minimal," as motorists deal with high prices at the pump.

The IEA lowered its worldwide forecast for oil demand growth in the fourth quarter by 0.5 million barrels a day and by 0.3 million barrels a day for all of 2008.

Global demand is seen as averaging 85.7 million barrels a day in 2007, an increase of 1.2 percent over 2006, and 87.7 million barrels a day in 2008, up 2.3 percent.

In the 30 industrialized members of the Organization for Economic Cooperation and Development, the IEA's forecast has been lowered by 160,000 barrels a day in 2007 and 300,000 barrels a day next year.

Demand growth in non-OECD countries is also projected to be lower by about 50,000 barrels a day in 2007 and 2008.

But it cautioned: "This forecast assumes that China and the Middle East ... will remain both largely untouched by the US subprime woes and to a large extent insulated from international oil prices" because of the cushioning effect of consumer subsidies.

In China demand for oil should come to 7.5 billion barrels a day in 2007, a 5.4 percent gain on 2006 and 8.0 million barrels a day in 2008, up 5.6 percent.

The report noted that China in late October announced a 9.0 percent hike in gasoline, diesel oil and jet fuel, in part to tackle product shortages.

On the other side of the equation, the IEA said world oil supply increased by 1.4 million barrels a day in October compared with September, as OPEC boosted supply by 410,000 barrels a day to 31.2 million barrels day, half of which came from Angola and Iraq.

The report raised its estimates of output from OPEC powerhouse Saudi Arabia in September and said the kingdom was believed to have increased production by another 100,000 barrels a day in October to almost 8.9 million barrels a day.

Higher output was also noted in Venezuela, Kuwait, Qatar, Nigeria, Algeria and Libya in October.

Leaders from the 12 members of the cartel are to meet in the Saudi capital Riyadh on Saturday and Sunday for a rare summit, only the third in the organization's 47-year history.

© 2007 Agence France-Presse