* India lifts interest rates overnight, UK Q4 GDP shrinks
* U.S. crude inventories seen up for second week - poll
* Coming up: API oil data, 4:30 p.m. EST Tuesday
(Recasts, updates prices and market activity, changes byline
and moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Jan 25 (Reuters) - Oil prices fell on Tuesday on
a surprise slip in Britain's fourth-quarter economic growth and
after India raised interest rates in an attempt to cool
inflation, fueling concerns about the rate of economic recovery
and high commodity costs.
Early pressure on oil came from a stronger dollar, though
the dollar index <.DXY> seesawed with the euro <EUR=> on
Tuesday. [] A stronger dollar can pressure
dollar-denominated oil because it raises prices to consumers
using other currencies, lifts the value of greenbacks to
producers and attracts investment into other markets.
U.S. crude futures, on track to end lower a sixth
consecutive day, found technical support above $86 a barrel,
ahead of weekly oil inventory reports, starting with industry's
data set to arrive late on Tuesday.
U.S. crude oil for March delivery <CLc1> fell $1.46, or
1.66 percent, to $86.41 a barrel at 11:33 a.m. EST (1633 GMT),
trading as low as $86.30, its lowest since prices fell to
$86.27 on Dec. 2. Tuesday's intraday high was $87.85.
The 100-day moving average for the U.S. March contract was
at $86.13, also providing some technical support.
In London, ICE Brent crude for March <LCOc1> fell $1.07 to
$95.54 a barrel, trading from $94.75 to $96.68.
Total Brent trading volume was at 423,600 lots traded,
according to Reuters data, 10 percent above the 250-day
average.
Total U.S. crude volume was above 437,000 lots traded near
midday in New York, 36 percent under the 250-day average.
"Maybe, just maybe there are still risks in this global
economy of ours. Oil prices took a drop ... on news that U.K.
gross domestic product fell 0.5 percent in the three months
through December," Phil Flynn, analyst at PFGBest Research in
Chicago said in a note.
Britain's economy suffered a 0.5 percent contraction in
fourth-quarter 2010 after December's heavy snow took a harsher
toll than economists had forecast. []
Also weighing on oil, India's central bank raised interest
rates to clamp down on inflation and warned of higher food
prices unless steps are taken to boost stocks. []
U.S. economic data was mixed. The nation's consumer
confidence improved more than expected in January to its
highest level in eight months. []
But a separate report showed U.S. home prices fell again in
November, the Standard & Poor's/Case-Shiller index said,
although the drop was not as sharp as expected. []
Brent crude's premium over U.S. benchmark West Texas
Intermediate (WTI) crude <CL-LCO1=R>, seesawed, but hovered
near $9 a barrel after reaching a $9.76 peak Monday.
"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.
U.S. OIL INVENTORY DATA EYED
The high U.S. crude inventories, especially at the Cushing,
Oklahoma, delivery point for the U.S. crude contract, have
helped keep U.S. crude prices below Brent.
U.S. crude oil inventories were expected to have risen last
week as imports increased, a Monday Reuters poll of analysts
showed ahead of data from industry group the American Petroleum
Institute due at 4:30 p.m. EST (2130 GMT) on Tuesday. []
Crude stocks were forecast to be up a second straight week,
with gasoline stockpiles also seen higher. Distillate stocks,
which include diesel fuel and heating oil, were expected to be
lower on increased heating fuel demand.
The report from the U.S. Energy Information Administration
is due on Wednesday at 10:30 a.m. EST (1530 GMT).
(Additional reporting by Zaida Espana in London and Florence
Tan in Singapore; Editing by Marguerita Choy)
