Lovecraft did read Moby Dick, it seems, in the spring of 1925. I had assumed Lovecraft had never read the book, since it isn’t listed in S.T. Joshi’s Lovecraft’s Library (2nd ed.). But here is Lovecraft in a letter (Letters from New York, p.122) stating that he was about to read the book…
[Lovecraft about to depart for Washington, 11th April 1925] “Kleiner and Loveman will wave tear-stain’d handkerchiefs after the tail-lights of the [train] coach that bears Kirk & me away. I shall probably wear my light overcoat, checking it at the Union Station in Washington, where I shall also check the book which is to beguile my hours of idleness — “Moby Dick, or the White Whale”, by Herman Melville”.
In “Suggestions for a Reading Guide” (intended as the final chapter of Lovecraft’s revisory work Well Bred Speech, 1936) he notes… “Of Herman Melville at least Moby Dick deserves a hearing.”
His almost-certain reading of Moby Dick seems fairly interestingly timed, given its ocean monster theme: four months later he wrote out the plot of “The Call of Cthulhu”.
Moby Dick was apparently deemed an obscure and rather neglected work until the Melville centenary in 1919 — and it wasn’t until 1920 that Melville’s own unexpurgated text of the work finally reached a modern audience and triggered “the Melville Revival”. This new text of the book was swiftly followed by the biography Herman Melville, mariner and mystic (1921) and Carl Van Doren’s chapter on Melville in The American Novel (1921). The following year saw publication of Melville’s letters. This scholarly interest led in time to a wider public interest, generated especially by the major Warner Brothers silent film of Moby in January 1926, titled The Sea Beast and starring John Barrymore. Predictably the movie makers managed to add a love interest, as seen in the lavish stills which illustrated Warner’s cash-in reprint of the novel of the book titled “Moby Dick Photoplay”. But this movie tie-in reprint cannot have been the edition Lovecraft took to Washington, since it was released 17th December 1925 according to Catalog of Copyright Entries.
The edition of Moby Dick that Lovecraft intended to read in Washington may instead have been borrowed stock from Kirk’s bookshop, and was presumably one of the early 1920s single-volume unexpurgated editions.