* Brent up 13 pct in five days; RSI above 60
* Rally extends on surprise U.S. crude, gasoline drawdowns
* Weaker dollar on Fed rate hike stalling helps oil too
* Traders say rally at risk on galloping Saudi output (New throughout, updating market activity and comments to settlement)
By Barani Krishnan
NEW YORK, Aug 17 (Reuters) - Oil's rally extended for a fifth day on Wednesday, helped by a weaker dollar and an unexpected drawdown in U.S. crude and gasoline but traders said the run up may not last, pointing to galloping Saudi output and technical factors.
Crude futures have gained as much as 13 percent since Thursday after Saudi Arabia, the kingpin in the Organization of the Petroleum Exporting Countries, stoked speculation that OPEC was ready for an output freeze deal with producers outside the group.
On Wednesday, Brent crude LCOc1 settled up 62 cents, or 1.3 percent, at $49.85 a barrel after touching five-week highs of $49.93.
U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 21 cents, or 0.5 percent, to $46.79.
Some traders and investors cautioned that crude futures, which slipped into bear market territory in early August after falling 20 percent from this year's highs in June, were looking overbought.
"We've gained too much in too little a time, at least technically, and I think this rally has to stop," said Donald Morton, who runs an energy-trading desk for Herbert J. Sims & Co, an investment banking house in Fairfield, Connecticut.
The Relative Strength Indicator for Brent was near 65, approaching the overbought level of 70, while for WTI it was at 62. Just earlier this month, both benchmarks showed RSI levels of 30 or below, indicating an oversold or bear market.
After three straight weeks of unexpected builds, U.S. crude stockpiles fell 2.5 million barrels last week, the Energy Information Administration said, surprising analysts who had expected a build of 522,000 barrels.
U.S. gasoline stockpiles also fell 2.7 million barrels, more than a million barrels than forecast. EIA/S
The dollar's .DXY drop, after the U.S. Federal Reserve's decision to wait again on rate hikes, added to oil's gains. USD/
The market's upside, however, was capped by a Reuters report that suggested Saudi Arabia was cranking its crude output to new record highs that could oust Russia as the world's top producer, even as OPEC talked of ways to ease a global glut.
Saudi Arabia could boost crude output in August to new records at 10.8-10.9 million barrels per day, the Reuters report said, quoting OPEC sources. OPEC/M
"With the U.S. rig count coming back online for several weeks, even if a (production) freeze did happen, we would be talking about freezing at higher levels of output," Tariq Zahir, a crude oil trader at Tyche Capital Advisors in New York.
The U.S. oil drilling rig count has also risen without pause for seven weeks, signaling more production ahead. RIG/U
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TAKE A LOOK-World oil glut persists as global slowdown looms