* Durable goods order for May falls unexpectedly
* Fed's Williams, Dudley bat for higher interest rates
* Micron higher after brokerage ups price target
* Futures up: Dow 70 pts, S&P 6.75 pts, Nasdaq 28.75 pts (Adds details, comment, updates prices)
By Tanya Agrawal
June 26 (Reuters) - U.S. stocks were set to open higher on Monday as oil prices climbed from last week's seven-month lows.
Oil edged up for the third straight session but gains were capped by the relentless rise in U.S. supply and bloated global inventories.
The recent drop in oil prices has spurred concerns about low inflation, which stubbornly remains below the Federal Reserve's 2 percent target rate.
The central bank raised rates this month for the second time this year and is expected to raise it again. Futures imply only a 50 percent chance of another rate hike by December.
Fed Chair Janet Yellen is set to speak in London on Tuesday and investors will look for clues on the rate outlook, after other Fed officials shared mixed views in recent days.
On Monday, San Francisco Fed President John Williams said the Fed needs to raise rates gradually or the economy runs the risk of overheating.
New York Fed chief William Dudley said recent narrowing of credit spreads, record stock prices and falling bond yields could encourage the Fed to continue tightening U.S. policy.
"The Fed policymakers had been broadly hawkish last week, and most of them anticipate another rate hike in 2017 (most likely in December)," said Hussein Sayed, chief market strategist at FXTM.
"However, fixed-income markets are saying it's over for this year as they don't see inflationary pressures coming anytime soon. It's still too far from December, but oil prices will play a significant role on how interest rates go from here."
Dow e-minis were up 70 points, or 0.33 percent, with 19,700 contracts changing hands at 8:35 a.m. ET (1235 GMT).
S&P 500 e-minis were up 6.75 points, or 0.28 percent, with 118,238 contracts traded.
Nasdaq 100 e-minis were up 28.75 points, or 0.49 percent, on volume of 26,826 contracts.
Data on Monday showed new orders for key U.S.-made capital goods unexpectedly fell in May, with non-defense orders excluding aircraft - a closely watched proxy for business spending plans - dropping 0.2 percent.
Economists polled by Reuters had expected a rise of 0.3 percent.
U.S. stocks ended higher on Friday after a last-minute trading spike, helped by gains in technology sector that offset weakness in financial stocks, sending the Nasdaq higher and giving it a weekly gain for the first time in three weeks.
Micron was up 2.2 percent at $32.42 after Cowen & Co increased its price target on the chipmaker's stock.
Store Capital jumped 10.7 percent to $23 after the company said Berkshire Hathaway bought a 9.8 percent stake in the company. (Reporting by Tanya Agrawal; Editing by Arun Koyyur)