RTRS:UPDATE 4-Oil up on bargain hunting even as political risks ease
* Iran says wants to resolve nuclear row within months
* Western envoys tout deal on core of U.N. Syria draft
* EIA data shows gain of 2.6 mln barrels in US crude stocks
By Simon Falush
LONDON, Sept 26 (Reuters) - Oil prices gained on Thursday, despite easing political worries and an improving supply picture, as traders sought bargains after sharp losses earlier this month.
Brent oil gained 34 cents to $108.66 a barrel by 1004 GMT, after slipping to $108 earlier in the session.
The benchmark is down 4.7 percent so far in September, on track for its biggest monthly fall since April. It is down around $8 from its peak earlier in the month as fears about escalating conflict in the Middle East have faded.
U.S. crude futures added 4 cents at $102.70 a barrel.
"Everything else points to lower prices, but sometimes in situations like this the opposite happens, and people close short positions and look for bargains after a big downward move," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.
Iran's new government said on Wednesday it wants to jump-start talks with world powers to resolve a decade-long dispute over its nuclear programme and hoped for a deal in three to six months.
This pushed oil down in late trading in New York on Wednesday after earlier strength.
"I think it was oversold last night on the back of Iranian comments," a trader said.
Iranian Foreign Minister Mohammad Javad Zarif is set to hold talks on the nuclear issue on Thursday with U.S. Secretary of State John Kerry as well as diplomats from Britain, France, Russia, China and Germany.
The West's standoff with Iran over the OPEC member's nuclear program has helped support oil prices for nearly a decade. Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day.
The improving situation in Syria also pressured oil prices.
Envoys from the United States, Russia, France, China and Britain have agreed on the core of a U.N. Security Council resolution to dispose of Syria's chemical weapons, three Western diplomats said. Russia denied such an accord had been reached.
Syria is not a major oil producer, but prices had climbed in the past on worries that any escalation of Middle East violence could disrupt oil flows from the region, which pumps a third of the world's crude.
FUNDAMENTALS PRESSURE
The demand/supply balance was also capping prices, analysts said.
"With weaker fundamentals still ahead, oil prices (are) likely to remain under pressure," Morgan Stanley analysts said in a note on Thursday.
Supply was recovering from Libya, and bigger U.S. stockpiles were putting pressure on prices.
Oil inventories in the United States rose 2.6 million barrels to 358 million barrels last week, which helped push U.S. crude oil futures lower immediately after the U.S. Energy Information Administration released the data.
The data also showed U.S. exports of refined products last week reached the highest level on record at 3.4 million barrels per day, 17.5 percent higher than a year ago, as refineries processed crude at high rates.
