The Collaborative International Dictionary of English v.0.48:

Pencil \Pen"cil\, n. [OF. pincel, F. pinceau, L. penicillum,
   penicillus, equiv. to peniculus, dim. of penis a tail. Cf.
   Penicil.]
   1. A small, fine brush of hair or bristles used by painters
      for laying on colors.
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            With subtile pencil depainted was this storie.
                                                  --Chaucer.
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   2. A slender cylinder or strip of black lead, graphite,
      colored chalk, slate etc., or such a cylinder or strip
      inserted in a small wooden rod intended to be pointed, or
      in a case, which forms a handle, -- used for drawing or
      writing. See Graphite.
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   3. Hence, figuratively, an artist's ability or peculiar
      manner; also, in general, the act or occupation of the
      artist, descriptive writer, etc.
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   4. (Opt.) An aggregate or collection of rays of light,
      especially when diverging from, or converging to, a point.
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   5. (Geom.) A number of lines that intersect in one point, the
      point of intersection being called the pencil point.
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   6. (Med.) A small medicated bougie.
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   Pencil case, a holder for pencil lead.

   Pencil flower (Bot.), an American perennial leguminous herb
      (Stylosanthes elatior).

   Pencil lead, a slender rod of black lead, or the like,
      adapted for insertion in a holder.
      [1913 Webster]

WordNet (r) 3.0 (2006):

pencil lead
    n 1: mixture of graphite with clay in different degrees of
         hardness; the marking substance in a pencil [syn: lead,
         pencil lead]