* India lifts interest rates overnight, UK Q4 GDP shrinks
* U.S. crude stocks to rise for second week - poll
* Coming up: API weekly crude stocks at 2130 GMT
(Updates prices, quotes, repeats to adjust headline)
By Zaida Espana
LONDON, Jan 25 (Reuters) - Crude futures fell more than $1
on Tuesday after an overnight rate increase in India and a
surprise contraction in the UK economy fanned concerns about the
pace of the global recovery.
By 1148 GMT, the U.S. crude benchmark <CLc1> also known as
West Texas Intermediate (WTI) was down $1.20 at $86.67 a barrel,
while Brent future prices <LCOc1> were down $1.31 to $95.30 a
barrel.
Investors worried that future growth in oil demand could be
curtailed as oil-hungry emerging economies such as India and
China move to tame inflation. India's overnight interest rate
increase was accompanied by a central bank warning that stronger
inflation risks remained. []
"We saw a similar price move already last week when there
was concern about further tightening in China, but it proved to
be short-lived," Commerzbank analyst Carsten Fritsch said.
Also on the supportive side, a source told Reuters that the
European Financial Stability Facility's maiden debt issue raised
a strong oversubscription.
"If you look at today's EFSF auction, it was heavily
oversubscribed, so there is still some support in the market for
commodity prices. Today's decline is just a temporary
correction," Fritsch said.
But a surprise contraction in fourth quarter UK GDP in the
last quarter of 2010 pulled the euro <EUR=> off earlier
two-month highs and pushed crude prices lower. []
Despite today's crude futures price correction, analysts
polled by Reuters revised their 2011 forecasts upwards by around
$4 in January, citing support from Chinese demand, but they
added gains over $100 a barrel would be short-lived as
inventories remain strong. []
In a note on Tuesday, Goldman Sachs analysts said cyclical
commodities such as oil and copper have entered a bull market
after joining the rally in agricultural commodities, even as
gold prices have faltered.
INVENTORIES DATA EYED
U.S. crude oil inventories probably rose last week as
imports increased and refinery utilisation was little changed
after dropping sharply the week before, a Reuters poll of
analysts showed ahead of weekly inventory reports. []
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, the poll showed. Distillate stocks are seen
down by 200,000 barrels last week.
Brent's premium over U.S. benchmark West Texas Intermediate
(WTI) <CL-LCO1=R>, came in from yesterday's intraday high at
$9.76 a barrel to around $8.63 a barrel by 1148 GMT.
"The WTI forward curve has steepened further at the front
end, because the front-month futures contract has come under
greater pressure than the contracts thereafter," Commerzbank
analysts said in a note.
"The background here is the expectation of an inventory
build in the U.S., which in turn will gain additional support
from the contango shape of the forward curve."
Later in the day, traders will focus on the two-day U.S.
Federal Open Market Committee meeting and data on the January
reading of U.S. consumer confidence due at 1500 GMT.
(Additional reporting by Florence Tan in Singapore; Editing
by Jane Baird)
