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Mon 23 Dec 2019 08:00 AM

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Oil holds losses as Kuwait nears deal with Saudi Arabia on production

Shared neutral zone, which has been shut for at least four years due to disputes between the two countries, can produce as much as 500,000 barrels a day

Oil holds losses as Kuwait nears deal with Saudi Arabia on production

Oil is up more than nine percent this month after the US and China struck a preliminary trade pact and the Organisation of Petroleum Exporting Countries and its allies agreed to deepen output cuts.

Oil held its biggest decline in three weeks as Kuwait signaled a deal with Saudi Arabia to renew crude output along their border and US shale explorers increased drilling.

Futures were little changed in New York after falling 1.2 percent on Friday, the most since November 29.

The shared neutral zone, which has been shut for at least four years due to disputes between the two countries, can produce as much as 500,000 barrels a day.

While US explorers last week boosted drilling by the most in almost two years, according to data from Baker Hughes Co. on Friday.

Oil is up more than nine percent this month after the US and China struck a preliminary trade pact and the Organisation of Petroleum Exporting Countries and its allies agreed to deepen output cuts. Hedge funds increased bullish bets in the week ended December 17 to the highest level in more than seven months on rising crude prices, according to data released Friday.

“Oil prices will continue to benefit from positive developments in the US-China trade,” Stephen Innes, a market strategist at AxiTrader, said in a note. “The seasonal demand slowdown in the first quarter could be an issue for this bullish view.”

West Texas Intermediate for February delivery fell 12 cents, or 0.2 percent, to $60.32 a barrel on the New York Mercantile Exchange as of 10:03am Singapore time. The contract declined 74 cents to settle at $60.44 on Friday.

Brent for February settlement fell 13 cents, or 0.2 percent, to $66.01 a barrel on the ICE Futures Europe Exchange. The contract fell 40 cents to close at $66.14 on Friday. The global benchmark crude traded at a $6.70 premium to WTI.

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