Oil prices have risen above $78 as Chinese economic indicators to be published this week are expected to signal strong growth in demand.

China, the world's second largest oil consumer is expected to raise the demand for crude oil in the international market. The country's industrial output grew by 20 percent in the year to December from November's 19.2 percent.

Front-month U. S. crude futures were at below the 50-day moving average with an important level at $78 on Friday. U. S. crude futures for February delivery were trading up 25 cents at $78.25 by 0318 GMT. On Monday it touched a low of $77.07.

The oil price in the market is 46 percent lower than $147 a barrel in July 2008. NYMEX will combine prices for Monday and Tuesday because of the Martin Luther King Day holiday.

The London Brent crude futures for March delivery stayed flat on Monday after it increased 2 cents to 77.12.

China's central bank could tighten monetary policy after a better than expected industrial output growth. The country's inflation, producer prices and retails sales data will be published on Thursday. Sustained strong economic growth is expected to offset the effects of tightening measures.

China Oil, Gas & Petrochemicals has planned the second phase of its state petroleum reserve and the country's crude oil imports are expected to rise 15 percent this year from 2009.

The traders use moving average to determine potential trends in prices. The 50-day moving average is at $78.04 for the front month U. S. crude futures contracts. The International Energy Agency expects OPEC to maintain production of crude oils, as it says that the world market has enough supplies.

Mark Pervan, head of commodity research at ANZ in Melbourne said, "Speculative traders have been increasing their net long positions by over 80,000 contracts, a 15% rise in the past month, and this could put on selling pressure should the oil price continue to drop below $74 a barrel."

As for February delivery the ICE gasoline contract was $3.25 lower at $626.75 a metric ton, while Nymex gasoline for February delivery was 116 points higher at 205.70 cents a gallon.