Oil rises over $2 to top $108 on hurricane threat

PERTH (Reuters) - Oil gained more than $2 to top $108 a barrel on Monday on worries that Hurricane Ike could threaten Gulf of Mexico production and oil and gas facilities.

Expectations that Organisation of the Petroleum Exporting Countries (OPEC) ministers would leave agreed output targets unchanged at a meeting on Tuesday also lent support.

U.S. light crude for October delivery rose as much as $2.38 to $108.61 a barrel soon after the start of electronic trade. It was up $2.15 at $108.38 at 6:29 p.m. EDT.

London Brent crude rose $2.07 at $106.16.

Hurricane Ike is expected to enter the Gulf of Mexico as a severe Category 4 storm, a U.S. Federal Emergency Management Agency official said on Sunday. It may threaten Gulf energy rigs that account for a quarter of U.S. oil output and 15 percent of natural gas production.

OPEC could rein in excess supply to shore up oil prices but is expected to leave production targets unchanged at the Tuesday meeting due to slower demand and an economic downturn. Calls from within OPEC to curb output have grown louder as demand has retreated.

The group is estimated to be pumping 790,000 barrels per day (bpd) above the collective ceiling of 29.67 million bpd for its 12 members with output limits, leaving room for maneuver before it needs to consider any formal cut.

Oil settled down $1.66 to settle at $106.23 a barrel on Friday, the lowest level since April 4, due to flagging demand in the United States and other consumer nations.

(Reporting by Fayen Wong)