* China inflation lower than expected but rate hikes loom
* Coming Up: US retail sales, API weekly inventory data
(Updates prices, adds analyst quote on unrest, UK CPI)
By Claire Milhench
LONDON, Feb 15 (Reuters) - Brent crude oil rose to flirt
with $104 a barrel on Tuesday, supported by lower than expected
Chinese inflation figures as well as unrest in Bahrain and Iran
which raised fears of potential supply disruption.
"We are seeing contagion from Tunisia and Egypt to other
countries that are more important for the oil markets," said
Christophe Barret, oil analyst at Credit Agricole Corporate and
Investment Bank.
Brent crude for April delivery <LCOc1> rose 61 cents to
$103.69 a barrel by 1048 GMT, after earlier pushing to $104.04
in the session, but still off a 29-month peak of $104.30 reached
on Monday.
U.S. crude for March delivery was up 52 cents to $85.33 at
the same time, after falling to 2-1/2-month lows in the previous
session, pressured by high stockpiles at key delivery point
Cushing, Oklahoma.
Oil was bouyed by continuing political tensions in North
Africa and the Middle East, following Egypt's ousting of
president Hosni Mubarak last week.
Police in Bahrain clashed with mourners in a funeral
procession of a Shi'ite protester killed in clashes on an
anti-government "Day of Rage", and a mourner was reported to
have died [] [].
Analysts say large-scale unrest in Bahrain could embolden
fellow marginalised Shi'ites in nearby Saudi Arabia, the world's
biggest oil exporter.
Iranian lawmakers called for the death penalty for
opposition leaders [] after thousands of opposition
activists rallied on Monday in support of popular uprisings in
Egypt and Tunisia [].
Barret also pointed to demonstrations in Algeria at the
weekend. "These countries are large oil producers." He said that
Algeria produces about 1.3 million barrels per day and Iran
about 3.7 million barrels per day, making it the second largest
OPEC producer.
"With Saudi Arabia's spare capacity at roughly 3.5 million
barrels a day it could have a severe impact on the oil market if
you have any interruption in oil exports from Iran."
Also lending support was China's consumer price inflation
coming in lower than expected for January at 4.9 percent. A
Reuters poll had forecast 5.3 percent []. China is
the world's second largest consumer of oil after the United
States.
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For a graphic on Chinese inflation click:
http://link.reuters.com/zan97r
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Although some economists expressed caution and suggested
Beijing would stick to its course of gradual monetary
tightening, the oil market shrugged off these concerns.
"Inflation was lower than initially feared so there is less
need for strong tightening and the previous tightening hasn't
had any negative impact on commodity demand from China, as
suggested yesterday by the strong impoort data," said Carsten
Fritsch, a commodity analyst at Commerzbank. "I think the fears
are much exaggerated."
China's crude oil imports for January have risen 27 percent
from a year ago as refiners raise production and beef up diesel
inventories to fight a drought [].
The market also looked towards U.S. January retail sales due
at 1330 GMT and U.S. weekly crude inventories from the American
Petroleum Institute (API) due at 2130 GMT.
A Reuters poll forecast a rise in crude oil stockpiles for
the fifth week in a row, to 2.6 million barrels, due to a
rebound in imports [].
Fritsch said the retail sales could allow the oil market to
draw some conclusions about gasoline demand.
The dollar <.DXY> fell 0.22 percent against a basket of
major currencies to 78.441. A weaker U.S. currency is generally
supportive for commodities priced in dollars as it makes it
cheaper for buyers using other currencies.
(Reporting by Claire Milhench; additional reporting by Jennifer
Tan in Singapore; editing by Keiron Henderson)
