* Investors focus on Chinese inflation, monetary policy
* Higher Chinese implied oil demand supportive
* U.S. Fed Reserve announcement due at 1915 GMT
* Coming Up: API inventory report at 2130 GMT
(Recasts, previous PERTH, updates prices)
By Una Galani
LONDON, Dec 14 (Reuters) - Oil prices consolidated on Tuesday ahead of U.S. inventory data as investors were bullish on the outlook for demand but wary over the prospect of a Chinese rate rise.
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.
Implied oil demand in China rose to record high last month, up 13.7 percent from a year earlier to nearly 9.3 million barrels per day, Reuters calculations based on preliminary official data showed.
Signs of strong fundamentals and the absence of an interest rate hike despite data which showed that inflation in China rose to a 28-month high, up 5.1 percent in the year to November, continued to support commodities, analysts said.
U.S. crude for January slipped 3 cents to $88.58 a barrel by 0940 GMT. ICE Brent climbed 10 cents to $91.29 The dollar fell 0.22 percent against a basket of currencies.
COLD WEATHER
"If nothing is going to be slowing their (China's) economy down in the short term, the market views that as a positive," said David Taylor, analyst at CMC Markets in Sydney.
Very cold weather across much of the northern hemisphere is expected to keep heating energy demand above average for this time of year, with temperatures in Europe forecast to fall further in the coming days.
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 that China will 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 forecasts.
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. (Editing by William Hardy)