* India lifts interest rates overnight, UK Q4 GDP shrinks
* U.S. crude inventories seen up for second week - poll
* Coming up: API weekly crude stocks at 2130 GMT
(Updates prices, quote)
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, and ahead of an expected build-up
in U.S. inventories due later.
By 1257 GMT, U.S. crude benchmark <CLc1> West Texas
Intermediate (WTI) was down $1.23 at $86.64 a barrel. Brent
future prices <LCOc1> were down $1.19 to $95.42 a barrel.
India's overnight interest rate increase was accompanied by
a central bank warning that stronger inflation risks remained,
renewing concerns that oil-hungry emerging economies could
temper their demand growth. []
"Everything is down today, not just crude," Commerzbank's
Carsten Fritsch said, as copper fell more than two percent and
gold fell to its lowest in ten weeks. []
"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."
A surprise contraction in fourth-quarter UK GDP also pulled
the euro <EUR=> off two-month highs. []
"The UK GDP data is very much isolated, but basically it's
an illustration of the type of growth we are going to get in
2011, particularly in Europe," CA CIB's Christophe Barret said.
In the United States, a two-day U.S. Federal Open Market
Committee (FOMC) meeting will get underway as the market awaits
economic data including the S&P Case/Shiller Home Price Index
for November due at 1400 GMT, the January reading of U.S.
consumer confidence due at 1500 GMT, as well as a slew of
earnings reports including Verizon, Johnson & Johnson, 3M and
U.S. Steel Corp.
U.S. INVENTORY DATA IN FOCUS
Eyes were also on the latest weekly reading of U.S. crude
oil inventories, which probably rose last week as imports
increased, a Reuters poll of analysts showed ahead of weekly
inventory data. []
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 West Texas Intermediate (WTI)
<CL-LCO1=R>, came in to around $8.78 a barrel by 1257 GMT from
yesterday's intraday high at $9.76 a barrel.
"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."
Despite today's crude futures price correction, analysts
polled by Reuters revised their 2011 forecasts upwards by around
$4 in January citing Chinese demand, while warning that gains
over $100 a barrel would be short-lived as inventories remain
strong. []
In a note on Tuesday, Goldman Sachs analysts in a note on
Tuesday 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.
(Additional reporting by Florence Tan in Singapore; Editing
by Jason Neely)
