UPDATE 3-Oil rises on Fed surprise, Iran move limits gains
* Fed says needs more evidence of solid growth, cuts outlook
* U.S. crude inventories fall to lowest since March 2012
* Libya oil output back to nearly 40 pct of pre-war level
* Coming up: U.S. initial jobless claims at 1230 GMT
(Recasts with Iran, updates throughout, changes dateline from SINGAPORE)
LONDON, Sept 19 (Reuters) - Brent oil rose for a second day on Thursday after the United States surprised markets by keeping its monetary stimulus programme intact, but gains were capped after Iran's President vowed his government would never develop nuclear weapons.
Brent crude for November delivery gained 58 cents to $111.18 a barrel by 0920 GMT, while U.S. crude was up 72 cents at $108.79.
This was well short of gains for other commodities like copper, and equities.
Brent and U.S. oil rose the most in three weeks in the previous session as the U.S. Federal Reserve's unexpected decision to delay the wind down of its massive monetary stimulus weakened the dollar and stoked demand for risky assets.
Oil's gains, however, receded after new Iranian President Hassan Rouhani vowed on Wednesday his government would never develop nuclear weapons, his strongest signal yet that he may be seeking a diplomatic thaw with the West after decades of acrimony.
This unwound some of the risk premium associated with fears about a potential confrontation between Iran and the West that is built into oil prices.
"Crude oil has to trade between Fed relief and Iranian belief," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
Elsewhere in the Middle East, easing fears of a U.S.-led military strike on Syria also helped to dampen prices, with Western powers meeting for a second day of talks on their draft resolution on eradicating Syria's chemical arsenal.
Low stockpiles also supported prices. Crude inventories in the U.S. fell last week to their lowest since March 2012 after data from the Energy Information Administration showed a larger-than-expected drop of more than 4 million barrels.
Also pointing to a tight supply picture, Iraqi oil exports remained curbed by a pipeline leak and maintenance work, though flows were expected to resume on Thursday.
However, taking some of the pressure off, Libya's crude production has recovered to 620,000 barrels per day (bpd), compared with its pre-war capacity of 1.6 million bpd, two state National Oil Corp (NOC) officials said on Wednesday.
Analysts at Goldman Sachs estimated the combined loss from Libya and Iraq is likely to exceed 100 million barrels by the end of September, keeping global oil markets tight in the next couple of months.
"It comes at a time when total inventories in the OECD are nearly 80 million barrels lower, and nearly all major regional markets are far tighter, as evidenced by strong physical grade differentials and nearly universally backwardated markets," Goldman analysts said in a note.
Backwardation refers to a market structure where prices are higher for prompt delivery than for later dates.
"This fundamental tightness will support prices and we maintain our near-term Brent price target of $115 a barrel."
(Editing by James Jukwey)