Oil fell below $46 a barrel on Tuesday as the U.S. government revised down its forecast for world oil demand in 2009.

The U.S. Energy Information Administration lowered its world oil demand forecast for 2009 to 84.27 million barrels per day, down 430,000 barrels from its previous projection.

The EIA report certainly didn't help the market. All it did was renew the concerns about demand, said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc.

U.S. crude fell $1.37 to $45.70 by 2:20 p.m. EDT, having risen earlier above $48. London Brent was down 21 cents at $43.92.

Oil prices have fallen $100 from last July as the global economic meltdown has eaten into world energy demand.

The International Monetary Fund warned on Tuesday that the world economy will likely contract this year in a Great Recession, adding further gloom to the economic outlook.

France's industrial output fell 13.8 percent year-on-year in January according to national statistics office INSEE, with Britain's production down 11.4 percent year-on-year.

The Organization of the Petroleum Exporting Countries meets in Vienna on March 15 to decide whether to add to already-announced 4.2 million barrel per day production cut since September to support oil prices.

A Saudi-owned newspaper said Monday that the world's top exporter wanted stricter compliance with existing production cuts before considering more cuts.

Compliance with existing curbs is over 80 percent, according to independent observers.

A Reuters poll of 14 analysts showed a majority expected no change in output targets on Sunday, with five forecasting a further cutback.

Dealers were also looking ahead to weekly U.S. inventory reports from industry group API on Tuesday and the U.S. government on Wednesday.

A Reuters poll of analysts see the Energy Information Administration reporting a 0.4 million barrel rise in oil inventories in the week to March 6, with gasoline supplies down 400,000 barrels and distillate supplies unchanged.

(Reporting by Edward McAllister, additional reporting by Maryelle Demongeot in Singapore and Alex Lawler and Christopher Johnson in London; Editing by John Picinich)