* S&P 500, Wall St. rally, weak dollar help lift oil
* U.S. crude inventories seen hit by pipeline snag
* Coming up: API oil data, 4:30 p.m. EDT Tuesday
(Recasts, updates prices, market activity, changes byline
and moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Sept 20 (Reuters) - Oil prices rose on Monday,
snapping a four-day slump and lifted by a rallying equities
market expecting the U.S. Federal Reserve to keep its policies
steady at a meeting this week and bouncing after crude prices
slumped 3.7 percent last week.
The S&P 500 <.SPX> hit a four-month high and all three
major indexes rose 1 percent as Wall Street sought to extend a
three-week rally ahead of Tuesday's monetary policy meeting by
the Federal Reserve. []
Trading sources also said crude futures were being
supported by expectations that the week-long shut down of
Enbridge Inc's <ENB.TO> Canada-to-U.S. crude oil pipeline
restarted on Friday may have pushed U.S. crude inventories
lower last week.
U.S. crude for October <CLc1> delivery rose $1.47, or 2.0
percent, to $75.13 per barrel at 12:05 p.m. EDT (1605 GMT),
trading from $73.32 to $75.45. The October contract expires on
Tuesday.
U.S. November crude <CLc2> rose $1.56, or 2.08 percent, to
$76.48 a barrel.
ICE Brent for November <LCOc1> rose $1.31 to $79.52.
"The petroleum markets are considering the upside in early
trading on Monday, encouraged by an upturn in the S&P 500," Tim
Evans, analyst at Citi Futures Perspective in New York, said in
a research note.
U.S. stocks held gains despite a survey that showed U.S.
home-builder sentiment held steady in September. It was
expected to strengthen. []
An official designation of the end of the U.S. recession
also added to the optimistic sentiment, sources said.
The U.S. recession ended in June 2009, making it the
longest downturn since the Great Depression of the 1930s, the
National Bureau of Economic Research, considered the arbiter of
U.S. recessions, said on Monday. []
"The recession is declared over, sprinkling some economic
optimism and the stock market is up and oil prices are tagging
along for the ride," said Phil Flynn, analyst at PFGBest
Research in Chicago.
The Fed's statement on Tuesday will be closely scrutinized
for signals on the debate about whether further large-scale
asset purchases are needed to support the recovery in the
world's top oil consumer.
The Federal Reserve is expected to renew a promise to keep
its portfolio from shrinking but is not expected to take new
steps to ease monetary policy. []
A weak dollar also was supportive to oil. A weak dollar can
lift oil prices because it makes dollar-denominated oil less
expensive for buyers using other currencies and lowers the
value of the currency paid to producers.
Oil prices shrugged off a downbeat assessment from the
Organization for Economic Cooperation and Development, which
said on Monday a U.S. recovery was under way but at such a
moderate pace that high unemployment will persist for some
time. []
U.S. crude prices posted their biggest percentage drop in
five weeks last week, declining on the expected Friday restart
of the pipeline that carries nearly one-third of Canadian crude
shipped to the United States.
High U.S. oil inventories have also weighed on oil prices.
If the Enbridge shut pipeline caused crude oil stocks to fall
last week, they will have slipped from a nearly 25
million-barrel premium to the year-ago level in the previous
week, according to government data. []
Since May, crude prices have been hemmed in between the
$64.24 intraday low on May 20, the weakest front-month price
since July 30, 2009, and the 2010 peak of $87.15 hit May 3.
Investment bank Societe Generale, in a report dated Sept.
17, cut its 2011 average forecast for U.S. crude by $7 to $85,
citing stronger than expected non-OPEC supply and high stocks
in industrialized countries.
(Additional reporting by Alex Lawler in London and Alejandro
Barbajosa in Singapore; Editing by Lisa Shumaker)
