* China lifts lenders' reserve rates requirement
* Brent premium over U.S. crude at 23-month highs of $8/bbl
* February Brent nears expiry, March contract priced lower
* U.S. CPI up, Dec retail sales rose less-than-expected
* Coming Up: Reuters/University of Michigan sentiment
(Updates with data, prices)
By Zaida Espana
LONDON, Jan 14 (Reuters) - Oil weakened on Friday after
China lifted lenders' reserve rate requirements by 50 basis
points to tame inflation, and after U.S. data showed sales in
December rose less than expected.
The U.S. data, which also showed an increase in the Consumer
Price Index and rising industrial output led by utility output
after an unusually cold winter, was eclipsed by China's move to
lift reserve requirements, the seventh increase since early
2010.
The country's recent tightening policy has prompted worries
that Beijing's appetite for buying commodities, and oil, could
lessen. [] []
By 1420 GMT, U.S. crude oil futures (WTI) erased some
losses, down 72 cents to $90.68 a barrel while February's Brent
crude contract <LCOc1> was 45 cents stronger at $98.51 a barrel
before expiring on Friday.
"It was widely expected (China) would try to tighten the
monetary base further," Commerzbank's Eugen Weinberg said. "It's
not actually surprising that they are trying to take steam out
of the economy."
"The market was pricing in the perfect world, and (...)
although not unexpected this might change sentiment and provoke
profit taking," he said.
Investors await the January reading of the
Reuters/University of Michigan consumer sentiment at 1455 GMT.
[]
BRENT-WTI DIVIDE WIDENS
The discount for U.S. crude futures against Brent reached
fresh 23-month highs over $8 a barrel on Friday, the widest
discount since February 2009. []
Brent has traded above U.S. crude since August last year,
supported by a combination of dwindling North Sea crude supplies
and disruption of oil grades priced off it, traders said.
[]
However, the expiry of the February Brent futures contract
on Friday was expected to erode some of the strong differential,
as February traded around $1 stronger than March, analysts said.
"We are not convinced that the extreme front premium of
Brent to WTI (March or April) can be sustained," Petromatrix's
Olivier Jakob wrote in a note.
Brent's March contract <LCOc2>, which will become the front
month on Monday, was up 39 cents to $97.75 a barrel by 1411 GMT.
The dislocation between the two benchmarks was further
exacerbated this week by production snags from Norway to Alaska.
They reinforced the view that a tightening of global oil
markets could benefit waterborne Brent crude over the U.S.
futures marker WTI, a grade delivered at the landlocked storage
hub of Cushing, Oklahoma.
Alaska's main oil pipeline moved closer to restoring oil
shipments to full volumes on Friday. The closure of the line due
to a leak last week choked crude flow to about half of normal
levels of 320,000 barrels per day on Thursday. []
"Supply concerns have played a key role in oil's ascent from
the $80 a barrel level but are showing signs of abating as of
late," Gain Capital Forex.com senior market strategist Daniel
Hwang said in a note late on Thursday.
The pipeline closure lent support to Brent crude prices this
week, lifting prices $1 shy of the $100 mark.
"The shutdown in the Trans Alaska Pipeline, a major
distributor to the West Coast, seems to be resolved and is
likely to allay fears of any long-term supply disruptions,"
Hwang said.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by William Hardy)
