Feb. 16 (Bloomberg) -- The Organization of Petroleum Exporting Countries said oil demand will rise faster than expected this year, as the Chinese economy shows few signs of slowing.

Chinese oil consumption will rise by 500,000 barrels a day, to 7 million a day, because of higher-than-expected economic growth of 8 percent, according to the monthly OPEC report received by e-mail today. China's fourth-quarter demand was 290,000 barrels a day more than previous estimates, OPEC said.

``The significant increase in China's fourth-quarter 2004 demand, although preliminary and still subject to possible revisions, leads us to believe that problems and bottlenecks still remain,'' according to the report from OPEC's Vienna headquarters.

The 11-member group has reduced crude production every month since October and as recently as three weeks ago predicted prices would drop after winter ends in the Northern Hemisphere. The Algerian OPEC delegate, Chakib Khelil, yesterday said members may have to reconsider plans to cut production in the second quarter, because of better-than-expected demand and supply cuts elsewhere in the world.

Crude oil was up 31 cents, or 0.7 percent, at $47.57 a barrel on the New York Mercantile Exchange as of 12:38 p.m. in London, maintaining gains made before the report was released. Oil is up 56 percent in the past year.

Second Quarter

The group, which pumps more than one-third of the world's oil, said it expects demand for OPEC crude to slow by 1.34 million barrels a day after U.S. winter ends. Members need to pump 27.7 million barrels a day in the second quarter, below estimated January output of 29.15 million a day, OPEC said.

OPEC last year failed to anticipate a jump in demand from China and in March lowered production targets to 23.5 million barrels a day. Three months later ministers abolished their quotas and were told by then-OPEC president Abdullah bin Hamad al-Attiyah to pump crude at will in a bid to meet the biggest increase in demand in three decades.

Quota increases in June and August were too late, and oil surged $55.67 a barrel in October, the highest in more than 20 years of trading in New York.

Global demand is set to rise this year by 1.73 million barrels, to 83.78 million barrels a day, the oil exporters group said in its monthly statement.

Last year's increase in oil demand was 2.55 million barrels a day, OPEC said.

To contact the reporter on this story: Sean Evers in the Dubai bureau at evers@bloomberg.net

Last Updated: February 16, 2005 07:50 EST