* U.S. crude stocks unexpectedly fall 4 million barrels
* Gold hits record high on weak dollar
* Fed plans to hold interest rates near zero for "extended
period"
(Updates with Fed decision, prices)
NEW YORK, Nov 4 (Reuters) - Oil rose on Wednesday toward
$81 a barrel after government data showed an unexpected decline
in U.S. crude inventories, and the U.S. Federal Reserve said it
plans to keep interest rates low.
U.S. crude for December <CLc1> traded up $1.12 to $80.72 a
barrel by 2:56 p.m. EST (1956 GMT), after settling up $1.47 on
Tuesday. Brent crude <LCOc1> rose $1.09 to $79.19 a barrel.
Data from the U.S. Energy Information Administration showed
a 4 million barrel decline in crude inventories in the world's
biggest consumer in the week to Oct. 30, countering analyst
expectations for a build. []
The draw helped lift oil markets, which have been eager to
see signs of a turnaround in the economy and flagging fuel
demand.
The Fed's Open Market Committee expressed confidence that a
U.S. economic recovery was building -- which could spur more
demand for crude -- but it stuck to an earlier commitment to
keep interest rates near zero for "an extended period" to help
usher the economy out of recession.
Analysts had warned earlier that oil prices could fall if
the Fed signaled any intention to boost the cost of borrowing.
Analysts said the EIA inventories report showed U.S. fuel
demand was still slow to recover, since oil product stocks
posted only modest drawdowns last week in spite of a 1.2
percent drop in refinery utilization rates. []
"The crude drop has boosted the market, but the report
can't be seen as too bullish. The fact is refinery rates
dropped more than a percent and we still didn't see a major
drop in product inventories," said Gene McGillian, analyst at
Tradition Energy, Stamford, Connecticut.
"Refiners don't see the need to push through more crude,
because demand hasn't been recovering at the pace that some
expected."
Gasoline stockpiles fell by 300,000 barrels last week,
against expectations for a slight build, while distillate
inventories dropped a less-than-expected 400,000 barrels,
according to the EIA.
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. []
Wall Street jumped, with the Dow and S&P 500 up more than 1
percent, on positive data about the services sector and
employment as investors awaited the Fed's assessment of the
economic recovery. []
Investors have put cash into commodities this year as a
hedge against inflation, helping to lift oil prices from below
$33 a barrel in December 2008. Oil has drawn support from a
weakening dollar, which fell against a basket of currencies on
Wednesday <<.DXY>. A weaker dollar makes commodities like oil
cheaper for those holding other currencies.
The Fed's closely watched policy statement signaled it
would not scale back economic stimulus measures. The Fed
expects to keep overnight interest rates, which it cut close to
zero in December, exceptionally low for a long time, citing
"low rates of resource utilization, subdued inflation trends,
and stable inflation expectations." []
(Reporting by Joshua Schneyer, Matthew Robinson, Robert
Gibbons and Gene Ramos in New York; Joe Brock and Alex Lawler
in London; Editing by Marguerita Choy)
