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UPDATE 9-Oil largely steady as dollar strengthens

* Dollar strengthens from three-year lows

* U.S. crude stocks unexpectedly fall by 907,000 barrels

* Coming Up: EIA data on U.S. oil inventories on Thursday (Adds API inventory data and comment, paragraphs 15-17)

NEW YORK, Feb 21 (Reuters) - Oil prices were little changed on Wednesday ahead of data expected to show rising crude inventories in the United States and as the dollar strengthened from last week's three-year lows.

Brent crude futures settled 17 cents, or 0.3 percent, higher at $65.42 a barrel, after trading between $64.40 and $65.53.

West Texas Intermediate crude (WTI) futures fell 11 cents, or 0.2 percent, to end at $61.68 a barrel, after trading between $61.86 and $60.92.

U.S. crude inventories were forecast to have risen for the fourth consecutive week, increasing 1.8 million barrels last week, an extended Reuters poll showed.

Data on U.S. inventories from the American Petroleum Institute will be released at 4:30 p.m. EST (2130 GMT) and government figures are due on Thursday at 11 a.m.. Both reports were delayed a day due to a U.S. holiday on Monday.

Rising U.S. shale output should lead to a modest inventory build, said Stewart Glickman, an energy analyst at CFRA Research in New York

"U.S. shale continues to rise to the occasion," he said.

Higher oil prices and rising output should feed increased investment in drilling and production, in turn boosting shale output more, he said.

U.S. crude oil production surpassed 10 million barrels per day (bpd) in November for the first time since 1970. Rising U.S. shale output has hindered efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, led by Russia, to reduce bloated global inventories and prop up oil prices by cutting output.

The dollar index hit a one-week high after the release of minutes from the U.S. Federal Reserve's January policy meeting.

A stronger dollar makes oil and other dollar-denominated commodities more expensive for holders of other currencies.

Oil gained some support from a rise on Wall Street markets.

"Oil prices and the S&P have been highly correlated, of late, with economic strength translating into improved company performance and higher energy demand," said John Kilduff, partner at investment manager Again Capital in New York.

Futures prices have been dented by physical crude markets, which are showing signs of seasonal weakness as refineries prepare to shutdown for maintenance between peak summer and winter fuel demand periods.

After settlement, industry group the American Petroleum Institute said U.S. crude inventories fell by 907,000 barrels in the week to Feb. 16 to 420.3 million. Analysts had expected stocks to rise by 1.8 million barrels. The U.S. Energy Information Administration (EIA) releases official inventory data on Thursday.

API said crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.6 million barrels. If confirmed by EIA data, that would be the ninth consecutive weekly fall at Cushing.

"Cushing continues to evaporate ... some of it is structural as Cushing is getting pulled into a larger single system centered in the Gulf Coast and a changing role for Cushing," said Richard Hastings, macro strategist at Seaport Global Securities in Charlotte, North Carolina, in an email.

(Additional reporting by Amanda Cooper in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and David Gregorio)