VIENNA (AP) -- OPEC slashed its estimate for oil demand this year and said it expected sales to stagnate next year, in a forecast Tuesday blaming global economic uncertainty for cutting into the world's appetite for crude.Updating last month's forecast, the 12-nation Organization of the Petroleum Exporting Countries said that it expected demand to be up by nearly 1 million barrels a day this year over last. That projected increase will be 180,000 barrels a day less than its previous estimate, it said.For next year, OPEC's monthly forecast said that estimated growth in world oil demand will fall to a daily 1.2 million barrels. That would leave the global appetite for crude at just over 88 million barrels a day for 2012."Uncertainty in the world economy has dimmed the picture for 2011, particularly in the OECD region," said the monthly report referring to the major industrialized nations. But it added that domestic policies in China and India -- the two developing countries traditionally driving demand -- also are expected to contribute to the downward revision in word demand growth.The Chinese plan to reduce fuel use, while India's decision to raise retail prices is also "expected to play a major role in dampening oil consumption in the coming year."OPEC, which produces around a third of the world's crude, said estimated demand for its own product remains unchanged for this year at 29.9 million barrels a day -- around 100,000 barrels a day higher than last year.For next year, however, forecast demand for OPEC oil will stagnate at this year's levels, representing a downward revision of around 100,000 barrels a day, it said.Oil prices remain volatile, driven by concerns over Europe's financial crisis and conflicting economic signals from the United States, the world's biggest crude consumer.Benchmark crude prices hovered above $85 a barrel on Tuesday, pausing after gains of 13 percent over the past week that were fueled by hopes Europe will contain its debt crisis and reduce the threat of global recession.Investor optimism was bolstered after German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday they would finalize a "comprehensive response" to Europe's debt crisis by the end of the month.Concern that a possible debt default by Greece could lead to a banking crisis had sent crude to a 12-month low of $75 last week. But traders now expect European leaders to agree to pump more capital into the region's banks, which would likely limit the possible damage of a default."A week ago, traders and investors saw Europe melting down," Cameron Hanover said in a report. "But Germany and France have agreed to contain the Greek contagion. The end-result is that confidence has been restored."Oil traders have also taken their cue from surging stock markets. The Dow Jones industrial average jumped 3 percent Monday and Asian markets gained Tuesday.OPEC has left its members' output quotas unchanged for over two years. Based on comments from leading producers in the group, expectations remain that the group will opt to hold to the status quo at its next ministerial meeting in December.At the same time, with the cost of oil falling sharply recently, key OPEC members Saudi Arabia and Kuwait are likely to cut back on exports they unilaterally boosted over the past few months as a way to cool overheated prices.Alex Kennedy in Singapore contributed to this report.