* U.S. weekly crude stocks fall, fuel inventories build-API
* Gold hits record high on weak dollar; supports commodities
* EIA weekly stock data, FOMC meeting statement eyed
(Recasts, updates prices)
By Joe Brock
LONDON, Nov 4 (Reuters) - Oil rose above $80 a barrel on
Wednesday, extending the previous session's near 2 percent gain,
ahead of U.S. government oil inventory data and supported by a
weaker dollar.
The Energy Information Administration is due to report crude
and product stocks data at 1530 GMT, a day after an industry
report showed a surprise draw in crude inventories, aiding an
oil price rally.
The U.S. dollar fell against a basket of currencies on
Wednesday <.DXY>, helping to send gold prices to record highs
and lifting oil. A weaker dollar makes commodities like oil
cheaper for those holding other currencies.
U.S. crude for December <CLc1> rose 75 cents to $80.35 a
barrel by 1402 GMT, after settling up $1.47 on Tuesday. London
Brent crude <LCOc1> added 63 cents to $78.74 a barrel.
"I think a combination of the weaker dollar and inventories
is lifting oil," said Carsten Fritsch, oil analyst at
Commerzbank in Frankfurt.
"After yesterday's data the market may be anticipating a
similar result in today's inventory numbers, which is another
reason for oil rising," Fritsch added.
Industry group American Petroleum Institute said late on
Tuesday that U.S. commercial crude oil stocks fell 3.3 million
barrels as imports dropped in the week to Oct. 30, versus
expectations for a 1.4 million-barrel rise.
The data lifted optimism that the pace of oil demand
recovery was picking up in the world's largest energy user,
helping to send oil prices higher.
The API did say however that gasoline stocks rose by 501,000
barrels last week against forecasts for a 300,000-barrel
increase, while distillate supplies increased by 1.8 million
barrels versus predictions for a 1 million-barrel decline.
[]
Gold hit a record high above $1,090 per ounce as the dollar
weakened and after the International Monetary Fund's 200-tonne
sale of gold to India's central bank enhanced sentiment toward
the metal. []
The U.S. Federal Reserve ends its two-day meeting on
Wednesday and, while it is expected to keep rates unchanged,
there is speculation it might drop or alter its pledge to keep
rates low for an "extended period", even as signs of a recovery
mount. [].
Analysts warned that oil prices could suffer losses if there
are any signs in the Federal Reserve's statement that monetary
policy is going to be squeezed.
"Not long ago a few words from Saddam Hussein could turn
prices on their head. Now a few words from the Fed is all it
needs," brokers PVM said in its research note on Wednesday.
"If there is any hint of tightening, hang on to your hats.
Few believe that the real economy has yet caught alight
sufficiently to remove the oxygen."
The International Energy Agency (IEA) will "substantially"
downgrade its long-term oil demand forecast in its annual energy
outlook next week, the second cut in a row, the Wall Street
Journal said, citing a person familiar with the report.
While the IEA's outlook is unlikely to affect the short-term
view that the global economy's recovery from recession is
lifting oil use, it is an important measure for oil companies
considering whether to build refineries or drill new wells.
[]
(Editing by William Hardy)
