Oil advances on China's demand outlook

Crude oil rose on forecasts that China will boost imports and after Qatar said OPEC isn't likely to step up production this year.

Oil advanced for the first time in six days after Qatar's Energy Minister said the Organization of Petroleum Exporting Countries probably won't raise output in 2010 because the market is sufficiently supplied. China's crude imports may rise 15% this year as the country starts building the second phase of its strategic oil reserves, China Oil, Gas & Petrochemicals said.

"The most important issue for the price outlook is for OPEC not to overproduce this year as swollen stockpiles do not need extra supplies at the moment," said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Crude oil for February delivery rose 42 cents, or 0.5%, to $78.42 a barrel in electronic trading on the New York Mercantile Exchange at 10:48 a.m. in Sydney. Yesterday's trades will be combined with today's because of the Martin Luther King Jr. holiday in the US The February contract, which closed at $78 on Jan. 15, expires tomorrow.

The more widely traded March futures gained 37 cents to $78.74.

Prices dropped 5.7% last week, the first weekly decline in five, after US crude oil and refined-product stockpiles rose and temperatures climbed.

Source bloombergutv.