Array

LONDON, Sept 5 (Reuters) Oil prices edged higher on Tuesday, rebounding slightly from a near 3-month low the previous session as supply concerns eased with the end of the U.S. summer driving season.

Brent crude for October delivery rose 47 cents at $68.18 a barrel by 1052 GMT, after dropping $1.44 on Monday to the lowest close since June 15.

Trading volumes were expected to pick up later on Tuesday after trading resumes at the New York Mercantile Exchange pits, which were shut for the U.S. Labor Day holiday on Monday.

Electronic trading of U.S. light sweet crude futures was done at $68.44 a barrel, 75 cents lower from Friday's settlement price.

''One of the most important reasons why oil prices have come down so much is because product support is so weak,'' said Eoin O'Callaghan of BNP Paribas. ''Gasoline prices have sold off showing strong supply fundamentals in that market.'' U.S. gasoline supplies have been more than ample to meet demand this summer driving season, which traditionally ends after the Labor Day holiday.

U.S. crude has slumped 11 percent in about a month and now stands more than $10 below its record high from mid-July.

A weaker-than-expected hurricane season and easing geopolitical tensions have also pressured prices.

''A seasonal peak in U.S. demand has passed and inventories remain comfortable,'' said Tobin Gorey of the Commonwealth Bank of Australia. ''We think oil prices are more of a two-way street than they have been for some time: the buy first, ask questions later mentality is dissolving.'' But some analysts saw prices bottoming out soon due to the uncertainty surrounding Iran's dispute with the West.

''The market has not seen clear signs about the Iranian issues.

Crude should trade in a range of around $67-$68 as long as the Iran disputes drag on,'' said Tony Nunan, the manager at the Mitsubishi Corp.'s risk management unit.

U.N. Secretary-General Kofi Annan on Monday called for a peaceful end to the OPEC producer's nuclear dispute, although he said Tehran had insisted it would not halt uranium enrichment before any talks.

Iran had already failed to meet an Aug. 31 deadline to halt its enrichment programme or run the risk of U.N. sanctions, but the European Union has engaged in a last round of negotiations to avert punitive action favoured by the United States.

REUTERS PKS RN1934