UPDATE 4-Oil rises on hurricane threat, awaits OPEC

                                
 * Oil rises ahead of OPEC output decision on Tuesday
                                
 * Hurricane Ike weakens over Cuba on path toward U.S. Gulf
                                
 * Fannie Mae, Freddie Mac bailed out to ease credit crisis

                                
 (Previous Perth, updates throughout)
                                
 LONDON, Sept 8 (Reuters) - Oil rose on Monday as Hurricane
Ike spun towards the U.S. oil hub in the Gulf of Mexico while
traders awaited OPEC's decision this week on output policy.
                                
 Ministers of the Organization of the Petroleum Exporting
Countries (OPEC) began gathering in Vienna.
                                
 They were due to meet to review the policy on Tuesday and
were widely expected to leave formal targets unchanged,
especially as the powerful hurricane has lifted oil prices.
                                
 "I don't believe there is any possibility we will change
production levels," Ecuador's Oil Minister Galo Chiriboga told
reporters on Sunday.
                                
 There has been no comment yet in Vienna from the minister of
Saudi Arabia, OPEC's most influential member. [ID:nL8601242]
                                
 U.S. light crude <CLc1> was trading $1.41 higher at $107.64
by 0900 GMT. It had fallen to a five-month low on Friday,
pressured by weaker oil demand, mainly in the developed
countries, amid an economic slowdown.
                                
 London Brent crude <LCOc1> rose $1.19 to $105.28.
                                
 "Whilst observing the goings on in Vienna over the next few
days, keep one eye on Hurricane Ike," Robert Laughlin with MF
Global said.
                                
 He said news this week may provoke swings in oil prices that
could be exaggerated as levels are hit that prompt buying or
selling on the basis of technical analysis of past price
movements.
                                
 "Volatility will be sky-high this week as the fundamental
headlines may well whip-saw technicians in coming days."
                                
 Hurricane Ike weakened into a Category 2 storm on Monday
after roaring ashore in northeastern Cuba as a dangerous
Category 3 hurricane, the U.S. National Hurricane Center said.
                                
  But it was expected to regain strength, entering the Gulf
of Mexico as a Category 3 storm. [nN08386949]
                                
 It may threaten Gulf oil and gas facilities, most of which
still remained offline in a slow recovery from the earlier
damage caused by Hurricane Gustav.
                                
 The U.S. Gulf of Mexico accounts for a quarter of U.S. oil
output and 15 percent of natural gas production. 
                                
 Hopes that a U.S. bailout of its top mortgage lenders,
Fannie Mae and Freddie Mac, would help temper an economic
downturn provided some support to the oil market.
[ID:nN07479172]
 
                                
 For a graphic on Hurricane Ike, please double click on:
https://customers.reuters.com/d/graphics/HR_IKE3.jpg
 
 (Reporting by Ikuko Kao in London, Fayen Wong and Nick
Trevethan in Perth, editing by Anthony Barker)