* U.S. Federal Reserve meets Tues, seen keeping rates low
* UN agency says Iran ups nuclear enrichment, supports oil
* Coming up: Fed meeting results, Tuesday 2:15 p.m. EDT
(Recasts, updates prices, market activity to settlement)
By Robert Gibbons
NEW YORK, Aug 9 (Reuters) - Oil rose on Monday for the
first time in four sessions, edging back above $81 a barrel on
expectations that the U.S. Federal Reserve will keep borrowing
rates low and may signal its readiness to print more money to
support a faltering economic recovery.
Trading was choppy, with oil's gains limited as the U.S.
dollar edged up after falling to a three-month low versus the
euro on Friday, while U.S. and global equities markets rose.
[] []
U.S. crude for September <CLc1> delivery rose 78 cents, or
0.97 percent, to settle at $81.48 a barrel, having traded from
$80.71 to $81.76. Front-month ICE Brent crude <LCOc1> rose 83
cents to settle at $80.99 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, at Tuesday's meeting, is widely expected to renew
its commitment to keep interest rates near zero for an extended
period. Traders also are watching to see if officials are more
concerned about economic recovery or the danger of falling into
a cycle of falling prices and slowing growth. []
The dollar rose against major currencies as wary investors
squared positions before the Fed's policy announcement. []
GASOLINE WEAKNESS EYED
The slow recovery in employment has hampered oil demand
growth, keeping crack spreads under pressure, especially for
gasoline, analysts and brokers said.
"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."
The RBOB gasoline crack spread <RB-CL1=R>, or profit
margin, was about $7.66 a barrel Monday afternoon, down from
$8.03 on Friday and after ending July above $10 a barrel,
according to Reuters data.
GEOPOLITICAL RISK PREMIUM
Geopolitical tensions and the risk of an incident between
the West and Iran over Tehran's nuclear program remained
supportive to oil prices, analysts said.
Iran has started using extra machines installed this year
to more efficiently enrich nuclear material, in violation of
United Nations sanctions, the U.N. nuclear agency said.
[]
"A combination of slight equities strength, geopolitical
tensions involving Iran's developing nuclear technology and a
potential storm development that could find its way into the
Gulf of Mexico are all keeping crude oil futures higher today,"
said Phil Flynn, analyst at PFGBest Research in Chicago.
A low pressure system over the Gulf of Mexico strengthened
and had a medium 30 percent chance of strengthening into a
tropical depression over the next 48 hours as it moves toward
the Louisiana coast, the U.S. National Hurricane Center said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on storms and threat to energy infrastructure:
http://www.reuters.com/subjects/hurricanes
Links: www.nhc.noaa.gov/
http://link.reuters.com/puw52n
http://www.skeetobiteweather.com/
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(Additional reporting by Gene Ramos in New York, David
Sheppard in London, Fayen Wong in Perth and Osamu Tskukimori in
Tokyo; Editing by David Gregorio)
