The global oil market tightened last month as demand in China increased and output in Saudi declined.

In its latest monthly report, the International Energy Agency (IEA) raised its forecast for global oil demand, with growth this year expected to be 930,000 barrels per day, up from the previous estimate of 865,000 barrels a day.

The report, however, warned against making hasty interpretations about the shift in oil production in Saudi and the Chinese demand. It stated: "A dip in [Saudi] air conditioning demand – as well as reduced demand from refineries undergoing season and maintenance – likely goes a long way to work explaining reduced output. Nothing for the global markets to worry about."

But the IEA cautioned although manufacturing has picked up in recent months in China, the debt levels and economic uncertainties could lead to swings in Chinese demand, in both directions, throughout 2013.

The IEA also warned crude prices could hit three-month highs at the start of this year, which it said could be due to the reduced risk of a recession in the US.