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Oil up on pre-OPEC speculation, U.S. refined fuel rally

NEW YORK -- Crude futures rose more than 1 percent on Monday as speculators took bullish bets on the odd likelihood of a surprise outcome at this week's OPECmeeting and as refined oil products rallied.

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The OPEC logo is seen at OPEC's headquarters in Vienna, Austria, on June 5, 2015. (REUTERS/Heinz-Peter Bader)
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NEW YORK -- Crude futures rose more than 1 percent on Monday as speculators took bullish bets on the odd likelihood of a surprise outcome at this week's OPECmeeting and as refined oil products rallied.

Few traders and investors expect any material change to OPEC's production policy when the Organization of the Petroleum Exporting Countries convenes in Vienna on Friday. Still, some were hedging for the possibility of a surprise.

"We're seeing a bit of buying interest, with prices set to be pushed and prodded around by pre-OPEC meeting rhetoric," said Matt Smith, director of commodities research at Clipper Data, a New York-based consultancy on energy markets data.

U.S. gasoline and ultralow sulfur diesel futures rallied as the front-month contracts in both headed for expiry.

ULSD, also known as heating oil, jumped 2 percent as colder weather enveloped the U.S. Northeast, the world's largest market for the heating fuel.

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Brent crude futures were up 59 cents at $45.45 a barrel by 10:42 a.m. EST.

U.S. crude's West Texas Intermediate (WTI) futures rose 55 cents to $42.26.

With Monday being the last session for November, Brent and WTI were likely to end the month some 8 or 9 percent lower as a global supply glut shows little signs of diminishing.

Iran, once the second-largest OPEC producer after Saudi Arabia, hopes to raise crude exports by as much as 1 million barrels per day within months of having sanctions against its nuclear program lifted.

Analysts reduced their 2016 price expectations for Brent crude further this month, saying in a Reuters poll they saw the benchmark at an average price of $57.95 a barrel, down 57 cents from the previous month's poll.

Reuters will also publish later on Monday its monthly OPEC oil production survey, giving an indication of market consensus on the way ahead.

OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy's chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20.

Any policy U-turn would be possible only if large producers outside the exporters' group, like Russia, were to join coordinated output cuts. But Russia's Energy Ministry said on Monday it will not attend this week's meeting, but expects an experts-level discussion with OPEC in mid-December.

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Russia is, meanwhile, drilling for more oil, according to data suggesting the No. 1 producer ready for a long fight for market share with OPEC. 

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