GROWTH in demand for oil is expected to slow for the first time in two years as China reins in runaway consumption, the International Energy Agency said yesterday.

Demand for oil will continue to increase, but at a slower rate, it added.

Lawrence Eagles, head of oil market analysis, said: ``Chinese growth still surpasses any other country. But there are some signs that demand growth is slowing.''

Last year China recorded demand growth of 19.3pc in the first quarter, year on year, followed by 24.6pc in the second quarter, he said. This year the IEA forecasts predict that demand growth will slow to 6.7pc in China in the first quarter and 7.4pc in the second quarter.

In terms of barrels of oil a day, the first quarter last year saw a rise of 1.01m barrels and the second quarter 1.28m barrels a day. This year growth is predicted to be just over 420,000 barrels a day in the first quarter and 480,000 in the second.

Oil market analysts have repeatedly raised demand forecasts over the past two years as consumption in Asia and the US outstripped expectations.

``From the demand side, it would appear that the risks are, for the first time in two years, edging towards the downside,'' the IEA wrote in its monthly Oil Market Report.

Mr Eagles said it was too early to say whether there would be a rise in petrol prices this year. ``It can depend on reliability of the refinery system but bar any disruptions, it would appear things are in a slightly better state than they were last year.'' In the US, stock levels look high on a seasonal basis, he added.

Scottish Power said yesterday that UK power prices are expected to rise further amid soaring crude oil prices and robust demand.

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