* U.S. crude stocks unexpectedly fall 4 million barrels
* Gold hits record high on weak dollar; supports commodities
* EIA weekly stock data, FOMC meeting statement eyed
(Recasts with U.S. inventory report)
By Joe Brock and Alex Lawler
LONDON, Nov 4 (Reuters) - Oil rose towards $81 a barrel on
Wednesday, extending the previous session's gain, after a U.S.
government report showed a surprise decline in crude stocks in
the world's largest consumer.
The U.S. Energy Information Administration said in its
report released at 1530 GMT that crude stocks fell by 4 million
barrels in the latest week. Analysts expected inventories would
rise by 1.4 million barrels. []
"On the surface it was a bullish surprise with a big draw in
crude," said Mike Zarembski, senior commodities analyst for
OptionsXpress.
U.S. crude for December <CLc1> rose $1.20 to $80.80 a barrel
by 1558 GMT, after settling up $1.47 on Tuesday. Brent crude
<LCOc1> added $1.08 to $79.19.
The EIA report also showed an unexpected decline in gasoline
stockpiles, which fell by 300,000 barrels. Distillates
inventories fell by 400,000 barrels, less than the expected 1
million-barrel decline.
Oil also drew support from a weak dollar, which fell against
a basket of currencies on Wednesday <.DXY>, helping to send gold
to a record high. A weaker dollar makes commodities like oil
cheaper for those holding other currencies.
Industry group the American Petroleum Institute said late on
Tuesday that U.S. 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.
Gold hit a record high above $1,095 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 towards
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 a 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."
(Additional reporting by Matthew Robinson in New York; Editing
by William Hardy and Sue Thomas)
