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UPDATE 5-Strong dollar weighs on oil price, lower inventories support

* U.S. crude stocks fell sharply last week - EIA

* Some U.S. shale producers plan to cut spending

* Shale drilling slowdown may be temporary - analyst (Updates prices, adds dollar strength)

LONDON, July 27 (Reuters) - Oil prices were under pressure from a stronger dollar on Thursday, but stayed close to eight-week highs with support from a steeper-than-expected slide in U.S. crude inventories.

Brent crude futures fell 34 cents at $50.63 a barrel at 1207 GMT, after rising about 1.5 percent in the previous session.

U.S. West Texas Intermediate futures slipped 37 cents at $48.38 a barrel.

A stronger U.S. currency, which had risen 0.07 percent , made dollar-denominated crude more expensive for investors holding other currencies and weighing on oil.

The fall in U.S. crude inventories, reported by the Energy Information Administration on Wednesday, staunching losses. The 7.2 million-barrel drop in inventories in the week to July 21 was much more than the 2.6 million barrels forecast.

"As encouraging as this may seem, the price recovery wont begin in earnest until evidence of U.S. oil rebalancing is mirrored on a global scale," Stephen Brennock at oil brokerage PVM said referring to the drawdown in oil stocks.

Expectations that the long-oversupplied market was moving towards balance were supported by this week's news that Saudi Arabia planned to limit crude exports to 6.6 million barrels per day (bpd) in August, about 1 million bpd below the level last year.

Kuwait and United Arab Emirates, fellow members of the Organization of the Petroleum Exporting Countries, have also promised export cuts.

U.S. shale producers including Hess Corp, Anadarko Petroleum and Whiting Petroleum announced plans this week to cut spending this year due to low oil prices.

But some analysts say a slowdown in shale drilling may prove temporary.

"Recent evidence of a slowdown in U.S. upstream activity has been exaggerated and will if anything be transitory," Brennock said.

"Instead, a strong finish to the year is on the cards with the advent of $50 a barrel safeguarding the rebound in U.S. tight oil supply," he added.

U.S. fuel exports are on track to hit another record in 2017, making foreign fuel markets increasingly important for the future growth prospects and profit margins of U.S. refiners.

In a sign Europe's major energy firms are turning a corner after a three-year slump, Royal Dutch Shell, France's Total and Norway's Statoil reported sharp rises in cash flow from second quarter operations.

Profits for the three companies beat analyst expectations, meaning they can all comfortably pay dividends and reduce debt.

(Additional reporting by Fergus Jensen in Singapore; Editing by Edmund Blair)