UPDATE 6-Oil falls below $78; U.S. inventory in focus

                                
 * IEA shows global fuel demand to grow in Q4
                                
 * Weekly U.S. EIA data due at 1600 GMT
                                
 * Dollar ticks up after U.S. jobs data
                                
 
                                
 (Adds quote, updates prices)
                                
 By Emma Farge
                                
 LONDON, Nov 12 (Reuters) - Oil fell below $78 a barrel on
Thursday as an expected hike in U.S. crude stocks and a rise in
the dollar from 15-month lows outweighed an IEA report that said
global oil demand will return to growth this quarter.
                                
 Delayed weekly inventories data out of the world's largest
fuel consumer the United States is set to show a 700,000 barrel
rise in crude stocks, a Reuters survey showed. [EIA/S]
                                
 This will follow a bigger-than-expected increase of 1.2
million barrels from the American Petroleum Institute. [API/S]
                                
 A drop in U.S. jobless claims helped boost the dollar from
15-month lows and this weighed on oil prices later.
[ID:nN11377609]
                                
 U.S. crude futures fell $1.57 to $77.71 a barrel by 1542
GMT, in a week where prices have peeped over $80 every day bar
Thursday.
                                
 Brent crude futures <LCOc1> fell $1.30 to $76.65 a barrel.
                                
 "Pressure on crude is pretty much dollar-related along with
yesterday's failure to sustain the $80 a barrel level, a
negative technical signal," said Tom Bentz, analyst at BNP
Paribas Commodity Futures Inc.
                                
 The price dip came despite a report from the International
Energy Agency (IEA) showing that global oil demand will grow in
the fourth quarter for the first time in over a year.
[ID:nN11377609] [IEA/M]
                                
 Its forecast for 2010 demand at 86.2 million barrels per day
is more bullish than two preceding surveys this week from OPEC
and U.S. government agency the Energy Information
Administration. [OPEC/M] [ID:nN10320501]
                                
 
                                
 HIGH STOCKS
                                
 But analysts said that traders have already factored in the
more positive demand picture and that this expectation helped
crude rally towards $80 a barrel in recent weeks.
                                
 "Most market participants have already played the game based
on a pretty strong demand recovery and it's not that
surprising," said Andy Sommer, senior oil analyst with EGL
Group.
                                
 He added that even in an environment of more robust fuel
demand, it will still take a long time to clear swollen stocks
of oil and oil products stored on land and in floating vessels.
                                
 "The overall inventories picture is still bearish," he said.
                                
 The IEA estimated that the volumes of oil products, mainly
heating oil, in floating storage was over 80 million barrels.
                                
 Analysts said that the dollar, still near 15-month lows
against a basket of currencies, was a key factor determining
future oil prices. [USD/]
                                
 Oil and the dollar tend to be inversely correlated because a
weak dollar makes the commodity relatively cheap for non-dollar
buyers.
                                
 Expectations that U.S. interest rates will remain near zero
for the foreseeable future has increased the appeal of
higher-yielding assets such as oil and gold.
                                
  Gold prices hit record highs above $1,122 an ounce on
Thursday. [GOL/]
                                
 (Additional reporting by Felicia Loo in Singapore; Editing
by Keiron Henderson)