CORRECTED - UPDATE 4-Oil falls on OPEC, easing storm threat

                                
 (Corrects last graph to show dollar hit a one-year high on
Monday)
  
                                
 * OPEC expected to leave formal output targets unchanged 
                                
 * Hurricane Ike expected to miss bulk of U.S. Gulf output
                                
 
 (Recasts, updates prices, details on Hurricane Ike)
                                
 By Jane Merriman and Matthew Robinson
                                
 LONDON, Sept 9 (Reuters) - Oil dropped to a new five-month
low on Tuesday on expectations OPEC would leave formal output
targets steady and as the threat of Hurricane Ike to U.S. Gulf
of Mexico energy infrastructure receded.
                                
 OPEC ministers meeting in Vienna were expected to keep
output targets steady with calls from some to trim excess supply
above agreed limits, about 790,000 barrels per day (bpd)
according to some estimates. [nL9703705]
                                
 Officials said oil prices -- which have tumbled nearly 30
percent from record highs over $147 a barrel in July -- are now
more reflective of fundamentals.
                                
 "I think everything is in balance -- inventories are in a
healthy position," said Ali al-Naimi, oil minister for Saudi
Arabia, the world's top exporter. [nSP109340]
                                
 U.S. crude <CLc1> fell $2.50 to $103.84 by 1340 GMT after
hitting a fresh five-month low of $103.72 a barrel earlier.
                                
 London Brent crude <LCoc1> traded down $2.11 to $101.33.
                                
 "OPEC leaving quotas unchanged is a little dissapointing for
 the market and Ike looks more like a downstream threat at the
 current track," said UBS oil strategist Thomas Stenvoll.
                                
 Hurricane Ike approached western Cuba as a Category 1 storm
before heading toward South Texas later in the week, but was
expected to miss the bulk of the U.S. offshore oil and natural
gas platforms in the Gulf. [nN09198882]
                                
 Energy companies -- still recovering from Hurricane Gustav
last week -- began shutting production as Ike approached the
Gulf, home to a quarter of U.S. oil production and 15 percent of
natural gas output. [nN09502555]
                                
 "If this storm does nothing, I think this could be the event
that pushes oil back down that $100 a barrel area," said Phil
Flynn of Alaron Trading.
                                
 Slumping demand in the United States and other big consumer
nations due to high fuel prices and wider economic problems has 
sent crude off its record peak.
                                
 
                                
 U.S. INVENTORIES
                                
 The impact of Gustav is expected to be reflected in weekly
U.S. goverment inventory data, due out on Wednesday.
                                
 "We will see more than the usual amount of draws coming out
of inventories both this week and next," said Edward Meir of
broker MF Global.
                                
 A Reuters poll of analysts forecast data would show a 4.3
million barrel draw in U.S. crude oil stocks last week. Gasoline
stocks were seen down by 4.2 million barrels and distillates by
2.5 million barrels. [EIA/S]
                                
 Surging consumption in China and other emerging economies
sent oil on a six-year rally, with additional support coming
this year from investors pouring cash into commodities as a
hedge against inflation and the weak dollar.
                                
 The rebound in the greenback has put additional pressure on
oil prices over the past few months, with the dollar hitting a
one-year peak against a basket of currencies on Monday.
[nL9383091]
 (Additional reporting by Angela Moon in Seoul; editing by James
Jukwey)