UPDATE 5-Oil rises on hurricane threat, awaits OPEC

                                
 * Hurricane Ike churns towards Gulf of Mexico
                                
 * OPEC expected to leave formal output target unchanged 
 (Updates prices, recasts, adds IEA comment)
                                
LONDON, Sept 8 (Reuters) - Oil rose on Monday as Hurricane
Ike spun towards the U.S. Gulf of Mexico oil hub and traders
awaited OPEC's decision this week on output policy.
                                
 OPEC ministers gathering in Vienna were expected to leave
formal production targets unchanged as Ike threatened U.S.
offshore oil installations still recovering from Hurricane
Gustav last week. [nL8683622]
                                
 U.S. crude <CLc1> traded up $1.35 to $107.58 by 1122 GMT,
after hitting a five-month low on Friday on weaker demand from
the United States and other developed economies.
                                
 London Brent crude <LCOc1> rose $1.08 to $105.17 a barrel.
                                
 "Whilst observing the goings on in Vienna over the next few
days, keep one eye on Hurricane Ike," Robert Laughlin with MF
Global said.
                                
 Hurricane Ike weakened into a Category 2 storm on Monday
after roaring ashore in northeastern Cuba, but was expected to
strengthen into a dangerous Category 3 hurricane when it enters
the Gulf of Mexico, home to a quarter of U.S. oil production and
15 percent of natural gas output. [nN08386949]
                                
 For a graphic on Hurricane Ike, please double click on:
 https://customers.reuters.com/d/graphics/HR_IKE3.jpg
                                
 Preparations for Ike have stalled recovery efforts after
Gustav, which shuttered oil production and refineries in the
region as it barrelled onshore. [nN07371553]
                                
 
                                
 OPEC
                                
 OPEC ministers were widely expected to leave formal targets
unchanged when they meet late on Tuesday as Ike gave prices a
lift following a two-month drop that has sent crude down from
record highs over $147 a barrel.
                                
 "I don't believe there is any possibility we will change
production levels," Ecuador's Oil Minister Galo Chiriboga told
reporters on Sunday.
                                
 Some ministers argue the market is amply supplied following
months of overproduction led by Saudi Arabia, however.
                                
 "I believe that the market is oversupplied," Iranian Oil
Minister Gholamhossein Nozari told reporters on arrival in
Vienna early on Monday.
                                
 Officials from Saudi Arabia, the world's top exporter, have
not yet arrived in Vienna to comment on output policy.
                                
 The head of the International Energy Agency, the adviser to
27 industrialised countries, said on Monday OPEC should maintain
output at current levels to help bring down oil prices.
[nPRG000990]
                                
 High fuel prices and the wider economic crisis have clipped
demand in the United States, sending prices down nearly 30
percent over two months after surging demand from China and
other developing economies sent crude on a six-year rally.
                                
 Hopes that a U.S. bailout of its top mortgage lenders,
Fannie Mae and Freddie Mac, would help temper an economic
downturn also provided some support to the oil market.
[ID:nN07479172]
 (Reporting by Ikuko Kao and Matthew Robinson in London, Fayen
Wong and Nick Trevethan in Perth; Editing by Michael Urquhart)