* China lifts interest rates for second time in six weeks
* U.S. crude inventories seen up last week-poll
* Coming up: American Petroleum Institute data at 2130 GMT
(Adds context, updates prices)
By Zaida Espana
LONDON, Feb 8 (Reuters) - Oil prices fell on Tuesday after
China moved to tame inflation with an interest rate increase,
the second lift in just over six weeks, and ahead of an expected
build in weekly U.S. crude stockpiles.
U.S. crude (WTI) for March <CLc1> fell $1.03 to $86.45 a
barrel by 1448 GMT. ICE Brent <LCOc1> lost 37 cents to $98.88 a
barrel.
Although China's rate move was widely anticipated prices
fell on fears higher interest rates could tame Chinese oil
demand growth, which according to the International Energy
Agency has overtaken the United States as the world's largest
energy consumer. []
"It was a largely expected move, they are trying to put
pressure on the economy in 2011 as they don't want inflation to
rise too much," Credit Agricole CIB's analyst Christophe Barret
said. "Of course it will have an impact on oil demand."
Prices were also under pressure ahead of the latest United
States weekly stockpiles data from industry body American
Petroleum Institute, which was expected to show another build.
In addition, crude's risk premium from unrest in the Middle
East, including the protests in Egypt, was seen fading.
"Egypt, at the centre of the crisis, is evidently losing its
ability to frighten markets," Commerzbank analyst Carsten
Fritsch said in a note. "Provided events do not escalate
further, oil prices could retreat more."
On Tuesday, Egypt's vice president Omar Suleiman said the
country has a plan and timetable for the peaceful transfer of
power, and promised no reprisals against protesters who
continued to camp on Tahrir Square. []
Despite receding price support from the recent wave of
unrest in the Middle East, Barclays oil analysts said
geopolitical risk will likely support further price increases
this year.
"In a world where spare capacity is being taken less for
granted, price breakouts due to geopolitical reasons are
becoming more likely and are likely to persist all through this
year," the Barclays wrote in a note.
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BREAKINGVIEWS:
-- China tightens too little, too late []
Graphic
-- China rates and inflation http://r.reuters.com/bap87r
Market comments on rate rise []
Analysis on central bank's new clout []
FACTBOX-Who gains from Chinese inflation []
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EYES ON U.S. STOCKPILES
U.S. crude inventories were expected to rise for the fourth
consecutive week, according to a Reuters poll, with industry body
American Petroleum Institute to release weekly data at 2130 GMT.
The U.S. government's Energy Information Administration will
follow with its own report on Wednesday. [] []
Another build in crude stockpiles at the delivery hub of
Cushing, Oklahoma, could drive stocks to new highs after rising
to a record 38.33 million barrels in the week to Jan. 28, based
on data from the EIA.
"A further inventory build in Cushing could push down the
price of the front-month WTI contract, steepen the WTI forward
curve further and lead to a renewed widening of the price gap
between Brent and WTI," Commerzbank's Fritsch said.
Brent's premium to WTI <CL-LCO1=R> remained strong at $12.43
by 1250 GMT, albeit off record highs of 12.50 in late January.
"U.S. crude stocks provide forward demand cover for 24 days,
the highest seasonal level since 1994 while total product
inventories are similarly swollen," JBC Energy consultants wrote
in a note.
(Additional reporting by Patryk Wassilewski in London and
Seng Li Peng in Singapore; editing by Keiron Henderson)
