* U.S. crude stocks to rise for second week - poll
* Technicals show oil to fall more to $86.50/bbl
* Coming up: API weekly crude stocks at 2130 GMT
(Adds euro outlook, updates prices)
By Florence Tan
SINGAPORE, Jan 25 (Reuters) - U.S. oil fell on Tuesday for a
second straight session as an expected rise in U.S. stocks and a
weak technical outlook weighed on prices.
Crude oil inventories in the U.S. rose last week as imports
increased and refinery utilization was little changed after
dropping sharply the week before, a Reuters poll of analysts
ahead of weekly inventory reports showed.
"We had a premium built into bad weather and the Alaskan
pipeline leak," said Jonathan Barratt, managing director at
Commodity Broking Services.
"The market thought it was demand, which it wasn't."
U.S. crude oil for March delivery fell 27 cents
to $87.60 a barrel at 0354 GMT, after posting a 1.39 percent
loss on Monday. The front-month contract was down for a second
session while March futures extended a decline for a sixth day.
ICE Brent crude for March fell 24 cents to
$96.37 a barrel.
A fall in the previous session extended a medium-term
downtrend for U.S. oil prices, Reuters technical analyst Wang
Tao said.
Barratt expects prices to slide to $80 a barrel in the first
quarter as investors focus on China's measures to cool inflation
while waiting for developed economies to show a steady recovery
pace.
The euro held near a two-month peak on Tuesday as
growing expectations that the European Central Bank will lift
interest rates ahead of the U.S. Federal Reserves.
The single currency could get a further boost if the
Federal Reserve maintains a cautious view of the U.S. economic
recovery after a two-day policy meeting on Tuesday and
Wednesday.
U.S. oil inventories were still above long-term averages
while the Northern Hemisphere has passed the peak of cold
weather, Barratt said.
Crude oil and gasoline stocks are expected to rise by
900,000 barrels and 2.2 million barrels, respectively, in the
week to Jan. 21, a Reuters poll showed. Distillate stocks are
seen down by 200,000 barrels last week.
Brent's premium to U.S. benchmark West Texas Intermediate
crude <CL-LCO1=R> remained robust and reached $9.76 a barrel
intraday on Monday, the highest since it hit $10.37 on Feb. 12,
2009.
But the spread narrowed to less than $9, helped by news that
trading company Hetco had sold a big North sea crude position.
The spread "is far too wide," Barratt said. "It has blown
out quite a few times before narrowing back to the $2-$3 range."
Reuters analyst Wang Tao said Brent's premium to WTI is on a
firm uptrend and is expected to reach $11.29 per barrel in two
weeks, after a minor drop to $8.00.
For a graphic on the Brent-WTI technical analysis, click:
http://graphics.thomsonreuters.com/WT/20112501102706.jpg
(Editing by Ed Lane)
