* U.S. Federal Reserve meets, expected to keep rates low
* Global and U.S. equities up, support oil
* Coming up: Fed meeting results, Tuesday 2:15 p.m. EDT
(Recasts, updates prices, market activity, changes byline and
moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Aug 9 (Reuters) - Oil rose for the first time in
four sessions on Monday, edging back above $81 a barrel on
expectations that the U.S. Federal Reserve may signal its
readiness to print more money to support a faltering economic
recovery.
Oil's gains were choppy with traders torn between a
slightly stronger stock market and the U.S. dollar, which edged
up after falling to a three-month low versus the euro on
Friday, was making crude oil a more attractive investment.
U.S. crude for September <CLc1> delivery rose 31 cents to
$81.01 a barrel at 1:25 p.m EDT (1725 GMT), having traded from
$80.71 to $81.76. Front-month ICE Brent crude <LCOc1> rose 32
cents to $80.48 a barrel.
Oil prices have faded from last week's high of nearly $83 a
barrel, dropping 1.6 percent on Friday in the wake of a
disappointing U.S. nonfarm payrolls report. []
"Weaker longs bailed out after the disappointing jobs data
Friday. Now the expectation is the Fed will keep interest rates
low and keep money flowing into the the stock market and
commodities," said Gene McGillian, analyst at Tradition Energy
in Stamford, Connecticut.
The Fed is widely expected to renew its commitment to keep
interest rates near zero for an extended period at Tuesday's
meeting. But traders also are watching closely to see if
officials are more concerned about the economic recovery or
about the danger of falling into a vicious cycle of falling
prices and slowing growth. []
The dollar edged higher against major currencies, coming
off Friday's lows, as wary investors eased positions before the
Fed's monetary policy announcement. []
The desire to wait for the Federal Reserve's announcement
and the normal slumber during the August peak vacation period
have lowered trading volume, industry sources said.
With an hour to go in the open outcry session in New York,
trading volume for U.S. crude was low, traders said, with a
total 322,143 lots transacted, according to Reuters data. The
30-day average is 530,876 lots traded per day.
GEOPOLITICAL RISK PREMIUM
Geopolitical tensions and the risk of an incident between
the West and Iran over Tehran's nuclear program continued to be
supportive to oil prices, analysts said.
Iran has started using extra machines installed this year
to enrich nuclear material to higher levels more efficiently,
in violation of United Nations sanctions, the U.N. nuclear
agency. []
Japan may consider cutting crude oil imports from Iran as
pressure builds from the United States to impose sanctions on
the Islamic Republic over its nuclear program, a Japanese trade
official told Reuters. []
GASOLINE WEAKNESS EYED
The slow recovery for employment continues to hamper oil
demand growth and keep crack spreads under pressure, especially
for gasoline, analysts and brokers said.
The RBOB gasoline crack spread <RB-CL1=R>, or profit
margin, was about $7.67 a barrel on Monday, after ending July
above $10 a barrel, according to Reuters data.
"As a result, gasoline demand growth will remain anemic and
a significant downswing in refinery activity may be required to
balance the gasoline market ...," Jim Ritterbusch, president at
Ritterbusch & Associates, in Galena, Illinois, said in a note.
"This was vividly reflected last week in a plunge in the
gas crack spreads and a sizable contraction in the front RBOB
(gasoline) spread."
(Additional reporting by David Sheppard in London, Fayen Wong
in Perth and Osamu Tskukimori in Tokyo; Editing by Marguerita
Choy)
