UPDATE 7-Oil slips towards $74 as U.S. driving season ends

                                
 * U.S. Labor Day holiday limits volume
                                
 * Oil-equities correlation falls
                                
 * Saudi Arabia raises October official selling prices
                                
 * Coming Up: U.S. employment trends data - 1400 GMT Tuesday
 
                                
 (Updates prices, detail, comment)
                                
 By Christopher Johnson
                                
 LONDON, Sept 6 (Reuters) - U.S. oil prices slipped towards
$74 per barrel on Monday as the end of the U.S. driving season
and high levels of unemployment in the world's biggest oil
consumer raised concerns over the outlook for demand.
                                
 The U.S. Labor Day holiday, which marks the traditional end
of American summer holidays when gasoline demand peaks, kept
volume low in many markets.
                                
 The New York Mercantile Exchange (NYMEX), home to benchmark
U.S. crude futures also known as West Texas Intermediate or WTI,
will combine trades from Sunday, Monday and Tuesday into one
trading session, with a single settlement at Tuesday's close.
                                
 U.S. crude for October delivery <CLc1> was down 37 cents at
$74.23 a barrel by 1240 GMT.
                                
 But ICE Brent <LCOc1> was stronger, gaining 31 cents to
$76.98 with traders saying the supply-demand picture looked a
little more positive in Europe than in the United States.
                                
 "The U.S. (oil futures) complex is coming under considerable
pressure from the end of the driving season and the high
inventory levels, while bearish employment data continues to
undermine hopes of economic recovery," said David Wech, head of
energy studies at Vienna-based consultants JBC Energy.
                                
 "I don't see any immediate signs of an upside. All the
fundamental factors look very weak," Wech added.
                                
 While U.S. gasoline demand accounts for more than 10 percent
of the world's oil use, U.S. refiners are set to cut the amount
of crude they process in coming weeks as they enter autumn
maintenance, in preparation to crank up output of winter fuels.
                                
 Front-month U.S. crude has traded between $64.24 and $87.15
this year, posting its high in early May and the low later that
month as the European credit crisis rattled markets.
                                
 Prices have mostly stayed between $70 and $80, a range that
OPEC producers say is high enough to foster investment in
capacity expansion and low enough to sustain economic recovery.
                                
 
                                
 DEMAND EXPECTATIONS
                                
 Asian equities touched one-month highs on Monday but oil
investors shrugged off the rally, focusing instead on a report
on Friday showing U.S. employment dropped less than expected.
[ID:nN02227856] [MKTS/GLOB]
                                
 The correlation between oil and equities has fallen in the
last two sessions as the fundamentals of an oversupplied oil
market weigh on sentiment.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For a graphic of the correlation between oil and U.S.
equities <.DJI> correlation, click:
                                
 http://link.reuters.com/cyz59n
                                
 For a graphic of the performance of a range of commodities
so far this year, click: http://r.reuters.com/hun72k
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 "The fact oil prices have not profited from friendly equity
markets and the weaker dollar has to be seen as a sign of
weakness," said Carsten Fritsch, analyst at Commerzbank.
                                
 "There is evidently concern that oil demand in the world's
largest oil consuming country, the United States, will drop as
the summer driving season comes to an end today, which may lead
to a further rise in already high inventories."
                                
 Equities markets have focused on hopes for economic growth
and supported oil in recent months despite a build in U.S. oil
inventories for record levels. U.S. petroleum stockpiles are at
their highest level since weekly figures were collated in 1990.
                                
 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:nLDE6840DK]
                                
 Christophe Barret, oil analyst at Credit Agricole, said he
expected oil prices to stay close to $75 for some time:
                                
 "Right now the level around $75 is pretty reasonable," he
said. "I think that until we get some big oversupply or a big
rebound in demand, we will not move from the range of $75-$80."
                                
 But many investors are pessimistic on the short-term
outlook. Money managers cut net-long positions in crude oil on
the NYMEX for a fourth consecutive week, an indication that
investors are decreasing bets that prices will rise.
 (Additional reporting by Marie-Louise Gumuchian in London and
Alejandro Barbajosa in Singapore; editing by Alison Birrane)