UPDATE 1-Oil rises after big U.S. crude stocks draw

                                
 * U.S. crude stocks fall 4.4 mln bbls after storm - API
                                
 * Markets eyes EIA weekly inventory data
                                
 * U.S. October industrial output up 0.1 pct; autos a drag
                                
 * Dollar gains after euro zone officials' comments
 (Updates prices, adds Japan crude stocks data in paragraph 10)
                                
 By Fayen Wong
                                
 PERTH, Nov 18 (Reuters) - Oil extended gains above $79 a
barrel on Wednesday, supported by an industry report that
showed crude stocks in the U.S. fell steeply last week, but
limited by U.S. economic data that painted a picture of a slow
recovery.
                                
 U.S. crude inventories fell a much sharper than expected
4.4 million barrels in the week to Nov. 13, according to weekly
data from the American Petroleum Institute released on Tuesday,
following storm-related disruptions to supplies in the Gulf of
Mexico. [ID:nN1757516]
                                
 "Oil is getting a modest lift this morning after the API
data showed a larger than expected drawdown in crude stocks,"
said Michelle Kwek, an analyst at Informa Global Markets in
Singapore.
                                
 U.S. crude for December delivery rose 24 cents to $79.38 a
barrel by 0416 GMT, adding to Tuesday's gains of 24 cents.
                                
 London Brent crude <LCOc1> gained 32 cents to $79.29.
                                
 Investors now await weekly inventory data from the Energy
Information Administration due out later on Wednesday, and any
disappointment could send oil prices markedly lower. [EIA/]
                                
 They will also scrutinise a raft of U.S. economic data to
gauge the pace of the recovery, after numbers showing U.S.
industrial output barely rose last month and wholesale
inflation was tame, painting a picture of a slow-moving
recovery from recession with ample slack to cool inflation.
[ID:nN17546734]
                                
 Indicators due include the consumer price index, real
weekly earnings and housing starts for October. <ECONUS>
                                
 "Oil looks overbought and the outlook appears dovish; the
demand fundamentals are weak, inventory levels are still
building, and the economic data are not pointing to a big
V-shaped recovery that the market was expecting," said Kwek.
                                
 Commercial crude inventories in Japan fell 3 percent to
hover around multi-decade lows hit in September, while gasoline
stocks rose to near a four-month high as demand slowed.
[ID:nT128963]
                                
 Gold hit another all-time high on Wednesday on worries
about future inflation and economic uncertainties, while Asian
stocks rebounded as the generally bearish dollar kept riskier
assets in demand. [MKTS/GLOB]
                                
 The dollar extended gains on Wednesday, as investors
trimmed short positions after euro zone economic policymakers
followed U.S. Federal Reserve Ben Bernanke in commenting about
the merits of a strong dollar. [USD/]
                                
 But dealers said that the trend of a long-term dollar
decline has not changed.
                                
 The greenback, which fell to 15-month lows against other
major currencies this week, has been driving commodities higher
for most of this year as investors sought hard assets to hedge
against the depreciating currency.
                                
 Oil has rallied from below $33 last December even though
global demand fell year-on-year for the first nine months of
2009, according to the International Energy Agency.
[ID:nSP6313]
 (Reporting by Fayen Wong)