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Oil is growing at an expected reduction in OPEC, but markets warn of trade problems



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SINGAPORE (Reuters) – Oil prices rose on Monday as traders expected a top Saudi Arabia exporter to encourage the OPEC production club to cut supplies by the end of the year.

Long can be seen through the pump during the sunset outside Scheibenhard, near Strasbourg, France, on October 6, 2017. REUTERS / Christian Hartmann

In spite of this, the markets remained cautious due to deep trade disputes between the two largest economies in the world, the United States and China.

Estimated oil price Brent LCOc1 was $ 67.21 per barrel at 0609 GMT, which is 45 cents or 0.7 percent since the last closing.

Oil for Western Texas Intermediate (VTI) CLc1 reached 58 cents or 1 percent, to $ 57.04 per barrel.

"Oil prices have continued to recover … (as) the market will closely monitor the possibility of the impact of the cuts," said Sukrit Vijaiakar, director of India's energy consulting company Trifecta.

The Organization of the Oil Exporting Countries (OPEC), which de facto led Saudi Arabia, is pushing the manufacturing cartel and its allies to reduce 1 million to 1.4 million barrels per day (bpd) supply in order to adapt to a slowdown in demand growth and prevent over-supply.

Despite Monday's rise, oil prices remain almost a quarter below their peak in early October, surpassing the increase in supply and the slowdown in demand growth.

This works partly after Washington approved to Iran's major oil buyers, mainly in Asia, the unexpectedly wide-ranging sanctions that Tehran re-invested in November.

Japanese refiners Fuji Oil continued to pursue Iranian raw purchases after Japan received one of those warnings, according to industry sources familiar with this issue.

Japan stopped buying Iranian oil before it was granted a waiver in early November.

In the meantime, oil production in the United States is rising.

US energy companies have added two oil plants on Sunday to November 16th, bringing the total number to 888, the highest level since March 2015, according to a report by energy company Baker Hughes on Friday.

The growing drilling activity indicates a further increase in US production of crude oil C-OUT-T-EIA, which has already jumped nearly a quarter of this year to a record 11.7 million barrels.

Failing to increase supply and slowing demand, financial markets are becoming more and more cautious in the oil sector, and money managers cut their bullish future on raw futures and options to the lowest level since June 2017, the US Commerce Commodity Exchange Commission (CFTC) said on Friday .

The group of speculators reduced their combined futures and position options on a broad U.S. and Brent during the week ending on November 13, and the lowest since June 27, 2017.

Reporting Henning Gloistein; Editing by Joseph Radford

Our standards:Thomson Reuters Trust Principles.
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