UPDATE 3-Oil climbs to 1-mth high on China growth, U.S. pipeline

                                

                                
 * Igor strengthens, no storms set to enter Gulf of Mexico
                                
 * Technicals show U.S. crude above $78 [ID:nSGE68C00E]
                                
 * Coming Up: Eurozone industrial output for July; 0900 GMT
  (Adds finding pipeline leak source, graphic)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Sept 13 (Reuters) - Oil rose to a one-month high
on Monday after China's strong industrial output signalled
robust demand, while an extended shutdown of the biggest
Canada-U.S. crude pipeline raised expectations of declining
inventories.
                                
 U.S. crude for October <CLc1> climbed as much as 1.2
percent to $77.33 a barrel on the New York Mercantile Exchange
(NYMEX), the highest price since Aug. 12, and was up 75 cents
at $77.20 by 0325 GMT. October ICE Brent <LCOc1> rose 40 cents
to $78.56.
                                
 Chinese factories ramped up production by a
larger-than-expected 13.9 percent in August, as the economy of
the world's second-largest oil user remained buoyant despite
government efforts to clamp down on bank lending.
[ID:nTOE68A00H]
                                
 "The Chinese data was overwhelmingly positive," said Ben
Westmore, a commodities analyst at National Australia Bank.
                                
 "China is in a soft landing after all the stimulus, and
emerging economies are growing quite strongly. In terms of oil
use, that portends strong demand in the coming months."
                                
 Enbridge's <ENB.TO> Line 6A, connecting Canadian production
with refineries in the Midwest and the pricing hub for U.S.
crude benchmark West Texas Intermediate (WTI) at Cushing,
Oklahoma, remained shut on Sunday following a leak three days
earlier.
                                
 Although the source of the leak was found late on Sunday,
no date was set for restoring flows through the 670,000 barrel
per day (bpd) duct, which can carry 7-8 percent of total U.S.
crude imports. [ID:nN12149769]
                                
 "One of the big concerns has been the stocks at Cushing,"
Westmore said. "The longer the pipeline is down, the more
likely it is that these stocks are going to fall and the market
tighten in that area."
                                
 ENVIRONMENTAL OVERSIGHT
                                
 Canada is the largest oil exporter to the U.S. and
Enbridge's pipelines carry the lion's share of that. The
shutdown of the company's biggest line might help ease a glut
in Cushing storage.
                                
 The leak has the potential to reduce flows to Cushing by
around 300,000 bpd, according to JP Morgan, taking into account
alternative routes and the fact that Line 6A was probably not
being used at full capacity when it leaked.
                                
 A section of the pipeline will have to be removed so the
repair can be made, the U.S. Environmental Protection Agency
said. That section will have to be replaced and inspections
done by federal regulators before use of the line can resume.
                                
 For a graphic on Enbridge's pipeline configuration:
                                
 http://link.reuters.com/qyz52p
                                
 Heightened environmental scrutiny following BP's oil spill
in the Gulf of Mexico this year has prevented the resumption of
flows through a smaller Enbridge pipeline that was also closed
because of a leak six weeks ago. For a factbox: [ID:nN10254087]
                                
 "Such leaks are not unusual, and in normal circumstances we
would expect the line to be up and running in a matter of
days," but a rapid restart of the most recently shuttered
pipeline is unlikely because of a "lengthy" environmental
review process, JP Morgan said in a note to investors.
                                
 The bank expects WTI to return to its usual premium to
Brent. While the front-month contract traded more than $3.50 a
barrel below the European benchmark early last week, on Monday
that discount had shrank to less than $1.50.
                                
 DUAL CONFIDENCE
                                
 The dollar weakened and Asian equities rose after positive
economic signs also came from top oil consumer the United
States, where wholesale inventories surged the most in two
years in July, according to a report on Friday.
[.T][ID:nN10254859]
                                
 "You get this dual effect of more confidence in U.S. oil
demand and the fears of a slowdown in emerging economies being
allayed," Westmore said.
                                
 Hurricane Igor strengthened rapidly over the Atlantic Ocean
on Sunday, becoming a large and dangerous Category 4 storm, but
its forecast trajectory kept it in the Atlantic heading towards
Bermuda at least for the next five days, away from oil and gas
infrastructure in the Gulf of Mexico. [ID:nN12143193]
                                
 Behind Igor, the U.S. National Hurricane Center (NHC) said
a tropical depression off the southernmost Cape Verde islands
was just below cyclone strength, poised to become Tropical
Storm Julia at any time.
                                
 The NHC was also monitoring a low pressure system over the
east-central Caribbean that it said could develop into a
tropical cyclone over the next couple of days.
 (Reporting by Alejandro Barbajosa; Editing by Manash Goswami)