* Investors bullish on U.S., focus on Chinese inflation
* Higher Chinese implied oil demand, cold weather supportive
* U.S. Fed Reserve announcement due at 1915 GMT []
* Coming Up: API inventory report at 2130 GMT
(Adds comment, updates prices)
By Una Galani
LONDON, Dec 14 (Reuters) - Oil prices consolidated on
Tuesday ahead of a meeting of the U.S. Federal Reserve as
investors stayed bullish on the outlook for demand but remained
wary over the prospect of a Chinese rate rise.
The Federal Reserve was expected to revise its economic
outlook to reflect stronger growth in the largest oil consuming
nation after recently agreeing to extend tax breaks, effectively
delivering fresh fiscal stimulus. []
China's decision so far to hold back from hiking interest
rates despite data at the weekend which showed that inflation
rose to a 28-month high in November to 5.1 percent has acted as
an additional support to prices, analysts said.
U.S. crude for January <CLc1> fell 30 cents to $88.31 a
barrel by 1319 GMT. ICE Brent <LCOc1> slipped 2 cents to $91.17
The dollar fell 0.2 percent against a basket of currencies
<.DXY>.
The positive sentiment from financial markets will not,
however, be enough to sustain an oil price above $90 unless
supported by strong fundamentals, analysts warned.
"The support is coming from the financial side. I would not
be surprised to see the oil prices stagnating or even falling
(in the coming days)," Eugen Weinberg, head of commodity
research at Commerzbank in Frankfurt told Reuters adding that
supply and demand did not justify the current price levels.
$100
That view was echoed in a note to clients by JBC Energy
which said that while $100 will be targeted in 2011 there was a
case for a price correction in the coming weeks despite cold
weather across much of the northern hemisphere keeping heating
demand above average for this time of year. []
U.S inventory data was due out at 2130 GMT.
U.S. crude oil stocks were expected to have fallen last
week, according to a Reuters survey of analysts. Crude stocks
were estimated to be lower by 2.2 million barrels, with
distillate stockpiles seen down 500,000 barrels. []
Gasoline stockpiles were expected to be have risen by 1.8
million barrels. []
While it is unclear how quickly China will move to tackle
inflation, the market appears to agree that monetary tightening
will not be aggressive.
Investors polled by Reuters expect China to raise interest
rates before the end of this year, but then to increase them
just twice more in 2011. []
That echoes comments made to Reuters on Tuesday by Chen
Dongqi, a senior government researcher, who said China would
steer clear of an aggressive increase of benchmark interest
rates because higher rates will only attract additional hot
money inflows. []
Analysts are gradually raising their oil price outlooks for
next year.
Credit Suisse said on Tuesday it had raised its 2011
forecast for U.S. crude futures to $85 per barrel, an increase
of $12.50, citing a recovery in global oil demand.
[]
The price forecast was raised "to reflect a recovery in OECD
demand (notably in North America) and continued strength in the
non-OECD (notably Asia)", it said in a note.
It also increased its 2011 outlook for ICE Brent by $12.7
per barrel to $84.5.
(Additional reporting by Rebekah Kebede in Perth; editing by
Christopher Johnson)
