UPDATE 2-Barclays cuts 2011, 2010 oil price forecasts

* Trims 2010 forecast by $4, cuts 2011 by $7

* Cites "macroeconomic disquiet" for forecast downgrade

(Adds details, further quote)

By Alex Lawler and Chris Baldwin

LONDON, Aug 26 (Reuters) - Barclays Capital (BARC.L), one of the most bullish banks on the oil market outlook in recent years, has cut its oil price forecasts for 2011 and this year, citing concern about the economy.

The bank cut its 2010 price forecast for benchmark U.S. crude CLc1 by $4 a barrel to $78 and reduced its 2011 forecast by $7 to $85, it said in a report on Thursday.

"There is enough fundamental strength to support prices above the $70 which is increasingly looking like a minimum for the basic health of the industry, but there is also enough macroeconomic disquiet to make any breakout of prices to the upside difficult to sustain," the report said.

Other forecasters have been trimming their price outlooks in the face of rising oil inventories -- which are at a record high in top consumer the United States -- and concern about the strength of economic recovery and future demand.

A Reuters poll released earlier this week showed forecasters revising down their expectations of the average oil price for this year for the fourth consecutive month. [O/POLL]

U.S. crude was expected to average $78.63 in 2010 and $83.84 in 2011, the poll of 31 analysts, banks and government agencies showed. The price has averaged around $76 so far this year and traded at $73.44 at 1553 GMT on Thursday.

In the report, Barclays cut its third-quarter 2010 price forecast by $8 to $76 and reduced the fourth-quarter prediction by $9 to $78.

Barclays' previous 2011 forecast of $92 was more than $8 above the consensus in the poll.

The bank said prices could prove to be firmer than expected should sentiment about the economy become more optimistic or if political tension over Iran and in Iraq -- both major oil exporters -- worsened.

"However, at the present time the momentum for macroeconomic sentiment still appears to be towards the more pessimistic, but perhaps not towards the completely apocalyptic," it said.

"The other main source of upside to the forecast remains the geopolitical environment, and in that regard we remain concerned that the current dynamics of both Iran's external relations and Iraq's internal stability are not moving in a benign direction." (Editing by Alison Birrane)