* U.S. crude inventories rose more than expected
* OPEC output falls in February
* U.S. output hit record in November, expected to rise more (Updates prices, adds quote, previous TOKYO)
LONDON, March 1 (Reuters) - Oil fell for a third day on Thursday, trading further below $65 a barrel as rising U.S. inventories, record output and a stronger dollar outweighed high OPEC compliance with its supply-cutting deal.
A U.S. government report on Wednesday showed a larger-than-expected increase in U.S. crude inventories and a rise in gasoline stocks. U.S. crude output reached a record in November, although it slipped in the last month of 2017.
Brent crude, the global benchmark, was down 8 cents at $64.65 a barrel at 1003 GMT. U.S. crude was down 19 cents at $61.45.
U.S. crude output hit a record 10.057 million barrels per day (bpd) in November and fell slightly in December, the government said on Wednesday, but further gains are expected.
"Weekly figures suggest the upward trend will resume in January and February and the old records are likely to be smashed," said Tamas Varga of oil broker PVM.
Oil also fell due to a stronger U.S. dollar, which makes commodities denominated in the U.S. currency more expensive for other currency holders. The dollar index hit a six-week high on Thursday.
The rise in U.S. output in recent weeks has been overshadowing supply curbs by other producers, led by the Organization of the Petroleum Exporting Countries and Russia.
"Despite the expanding output curbs by OPEC and non-OPEC members such as Russia, the market has been focusing more on rising U.S. output since around late January," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
OPEC and its allies began to cut supply a year ago to get rid of a glut. The group's production fell in February to a 10-month low, a Reuters survey found on Wednesday.
(Additional reporting by Osamu Tsukimori Editing by David Evans)