Crude futures inched higher Wednesday amid gains in European stock markets and a weaker dollar, but cautious sentiment ahead of U.S. oil inventories data and the U.S. Federal Reserves policy statement kept a lid on further gains.

European stocks mostly marched higher following some better-than-expected corporate earnings news. This, coupled with a softer dollar, helped lift oil futures.

At 1130 GMT, the front-month December Brent contract on Londons ICE futures exchange was up $0.30 at $78.41 a barrel.

The front-month December light, sweet, crude contract on the New York Mercantile Exchange was trading $0.44 higher at $80.04 a barrel.

The ICEs gasoil contract for November delivery was up $12.00 at $637.25 a metric ton, while Nymex gasoline for December delivery was up 65 points at 200.69 cents a gallon.

However, traders were reluctant to push oil futures higher further ahead of the widely watched U.S. oil inventories data due 1530 GMT by the Energy Information Administration.

The American Petroleum Institute, an industry group, Tuesday reported a decline in crude oil inventories of 3.3 million barrels, a 500,000-barrel increase in gasoline stocks and a 1.8 million-barrel rise in distillate inventories in the week ended Oct. 30.

The API data came as a surprise as many analysts expected crude stocks to build. Crude oil inventories were expected to rise by 1.4 million barrels, according to the mean of forecasts of 14 analysts surveyed by Dow Jones Newswires.

Gasoline stocks were forecast to be 100,000 barrels lower and distillates inventories to fall by 1 million barrels, the survey showed.

"[The] EIA report is setting up to be a market mover especially if there are any significant deviations from the projections," said Dominick A. Chirichella, analyst at the Energy Management Institute.

However, the impact of the EIA data may soon fade as the market will focus on the Feds statement, due at 1915 GMT.

"Any hint that the Fed is looking to roll back some of its recent stimulus could have a profound effect on the dollar and likely result in another down move in commodities," said Edward Meir, senior commodity analyst at MF Global.

Meir expected the Fed likely to signal to the market that "growth has picked up, but saying it would stay accommodative for the time being.

"We suspect that even such a nuanced stance could result in the dollar pushing slightly higher, and likely keeping any advance in the commodity markets somewhat in check," he said.

Elsewhere, the International Energy Agency will release its annual World Energy Outlook next Tuesday.

It will make a "substantial" downward revision to its long-term forecast for global oil demand, marking the second year running the group has slashed its view of the worlds thirst for oil, said the Wall Street Journal, citing a person familiar with the matter.