UPDATE 3-Oil jumps nearly $2 to $108 on hurricane threat

                                
 * Oil rises nearly $2, first gain in seven sessions
                                
 * Hurricane Ike weakens over Cuba on path toward US Gulf
                                
 * Fannie, Freddie bailed out to help ease credit crisis
                                
 * Traders await OPEC output decision on Tuesday (Adds
quotes, updates prices)
                                
 By Fayen Wong
                                
 PERTH, Sept 8 (Reuters) - Oil rose nearly $2 to $108 a
barrel on Monday, rebounding from a five-month low on worries
that Hurricane Ike would tear through the Gulf of Mexico, and
on hopes that a U.S. bailout of its top mortgage lenders would
help temper an economic downturn.
                                
 Traders were also awaiting a production decision from the
Organisation of the Petroleum Exporting Countries (OPEC), with
expectations that ministers would leave agreed output targets
unchanged at a meeting on Tuesday.
                                
 U.S. light crude for October delivery <CLc1> rose $1.75 to
$107.98 by 0655 GMT, after climbing as much as $2.89 in early
trade. The gains snapped a losing streak more than a week long
that knocked prices to their lowest since April after last
week's Hurricane Gustav left most Gulf oil and gas facilities
intact.
                                
 London Brent crude <LCOc1> rose $1.39 to $105.48.
                                
 Hurricane Ike weakened to a Category 3 hurricane as it bore
down on Cuba on Sunday, but was expected to retain strength,
entering the Gulf of Mexico as a severe Category 4 storm, a
U.S. Federal Emergency Management Agency official said.
                                
 For a graphic on Hurricane Ike, please double click on:
https://customers.reuters.com/d/graphics/HR_IKE3.jpg
                                
 It may threaten Gulf energy rigs that account for a quarter
of U.S. oil output and 15 percent of natural gas production.
Nearly 80 percent of the Gulf's oil production remains shut in
following Hurricane Gustav, and Ike's approach has forced Shell
Oil Co. to stop returning workers to its platforms.
                                
 "There is a concern these storms could impact refineries
and production more significantly than Gustav did and we might
see more buying when London opens as investors cover themselves
in case of damage," said Gerard Rigby, analyst at Fuel First
Consulting in Sydney.
                                
 He said the U.S. government's weekend move to bail out
mortgage finance companies Fannie Mae and Freddie Mac also lent
support, raising hopes that the latest effort to prop up the
ailing housing market would help quell the credit market crisis
that has pushed economies toward recession.
                                
 For more stories on the bailout click: [ID:nN07479172]
                                
 In Vienna, oil ministers appeared likely to stay the course
on production, although some of the more hawkish members, such
as Venezuela, may talk about possible curbs, Rigby said.
                                
 Iranian Oil Minister Gholamhossein Nozari told reporters on
Monday he considered the oil market oversupplied, but declined
to say what action, if any, the group may take. [nL8598897]
                                
 OPEC is estimated to be pumping 790,000 barrels per day
(bpd) above the collective ceiling of 29.67 million bpd for its
12 members with output limits, leaving some room for manoeuvre
before it needs to consider any formal cut.
 (Reporting by Fayen Wong, additional reporting by Nick
Trevethan; Editing by Jonathan Leff)