UPDATE 3-Oil dips towards $74 on U.S. glut at driving season end

                                
 * Oil de-couples from rising equities as fundamentals weigh
                                
 * Saudi Arabia raises October official prices to all
regions
                                
 * Coming Up: Euro zone Sentix index for September; 0830
GMT
 (Updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Sept 6 (Reuters) - Oil fell for a second
straight session on Monday as the end of the driving season in
the United States and record petroleum stockpiles there fuelled
doubt that supplies would drain in the face of tepid economic
growth.
                                
 U.S. crude for delivery in October <CLc1> fell as much as
0.7 percent to $74.09 and was down 22 cents at $74.38 a barrel
by 0638 GMT, while ICE Brent crude <LCOc1> shed 3 cents to
$76.64.
                                
 Oil's correlation with stock markets has diminished in the
past two sessions as the fundamentals of an oversupplied market
and hurricanes deviating from the oil-rich Gulf of Mexico weigh
on sentiment. Asian equities touched one-month highs on Monday,
while a stock rally on Friday sent copper to a four-month high.
                                
 For a graphic on oil's correlation with equities:
http://graphics.thomsonreuters.com/AS/0810/ABE_20100609093314.jp
 g    "We are awash with oil, thoughts about anything happening
with the hurricanes have been put to the side and there is
nothing on the geopolitical front to worry us," said Peter
McGuire, managing director at CWA Global Markets in Sydney.
                                
 "There isn't much to drive the market higher.
Traditionally, this time of year we are going into a quiet
period when demand comes down."
                                
 The U.S. driving season, the summer period when gasoline
consumption peaks, runs from the Memorial Day holiday in late
May to the present Labor Day holiday.
                                
 While U.S. gasoline demand accounts for more than 10
percent of the world's oil use, refiners are set to decrease
the amount of crude they process in coming weeks as they enter
autumn maintenance, in preparation to crank up output of winter
fuels.
                                
 The New York Mercantile Exchange, the home for U.S. crude
benchmark West Texas Intermediate, will, because of Monday's
U.S. Labor Day holiday, combine trades happening Sunday
evening, Monday and Tuesday into a single trading session, with
just one settlement by the close of Tuesday's trade.
                                
 U.S. weekly inventory reports are typically delayed by one
day to Wednesday and Thursday on weeks when a holiday falls on
Monday.
                                
 Front-month U.S. crude has traded between $64.24 and $87.15
this year, posting the high in early May and the low later that
month as the European credit crisis rattled markets. Prices
have most of the time remained between $70 and $80, a range
that OPEC says is high enough to foster investment in capacity
expansion and low enough to sustain economic recovery.
                                
 DEMAND EXPECTATIONS
                                
 Oil fell on Friday, driving prices to their third weekly
drop in four weeks after data showed the U.S. non-manufacturing
sector grew in August for an eighth straight month, but at a
slower pace than in July and at a rate that was below
expectations. [ID:nN03111828]
                                
 Investors in the crude market shrugged off equity rallies
in Wall Street on Friday and in Asia on Monday after a separate
report showed U.S. employment dropped far less than expected
and private hiring was a positive surprise. [ID:nN02227856]
                                
 The strength of equities based on expectations of future
economic growth helped bolster oil prices and kept the focus
off high U.S. oil inventories for the past three months. Total
U.S. petroleum stockpiles are at their highest level since
weekly records began in 1990.
                                
 G20 delegates agreed on Saturday that the global economic
recovery would endure although the speed of expansion may slow,
a South Korean official said. [ID:nTOE683012]
                                
 As a reflection of an improving outlook for crude demand
from emerging markets, Saudi Arabia raised its official selling
prices (OSPs) for benchmark Arab Light and other grades to
customers in Asia, the U.S. and Europe in October, state oil
company Saudi Aramco said on Sunday. [ID:nLDE6840EX]
                                
 Still, money managers cut net-long positions in crude oil
on the New York Mercantile Exchange for a fourth consecutive
week, an indication that investors are decreasing bets that
prices will rise. The net-long positions tumbled to 71,495 in
the week to Aug 31, the Commodity Futures Trading Commission
said on Friday, from almost 134,000 in the week to Aug 3.
[ID:nN03132435]
                                
 The remnants of Tropical Storm Gaston looked very likely to
strengthen again as a tropical cyclone in the Atlantic and
could threaten the Caribbean's Leeward Islands in coming days
as the system moves on a westward track, U.S. forecasters said
on Monday. [ID:nN05241435]
                                
 The National Hurricane Center gave Gaston, which weakened
to a remnant low-pressure area on Thursday soon after initially
becoming a tropical cyclone, a 70 percent chance of
redeveloping over the next 48 hours.
                                
 It was still too early to determine if the weather system
would eventually reach the oil-rich Gulf of Mexico.
                                
 Hurricane Earl made landfall in Canada on Saturday and
fizzled after a series of scares along the U.S. East Coast,
flooding roads, felling trees and cutting power to tens of
thousands in the Atlantic province of Nova Scotia.
[ID:nN04157620]
 (Editing by Manash Goswami)