Oil rallies on Chinese import boost and Mideast tensions

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UPDATE 8-Oil rallies on Chinese import boost and Mideast tensions

* Strong Chinese imports support crude prices

* Fighters deploy near Iraq'sKirkuk oil region

* Trump to lay out Iran strategy, traders fear sanctions

(Updates prices, adds quote)

By Libby George

LONDON, Oct 13 (Reuters) - Oil prices firmed on Friday as bullish news from strong Chinese oil imports to turmoil in the Middle East put Brent on track for a nearly 3 percent weekly gain.

The developments added to other signs that the market was finally rebalancing after years of excess, but analysts warned that the 2018 balance was still shaky.

Brent LCOc1 was at $57.20 at 1335 GMT, up 95 cents. U.S. West Texas Intermediate (WTI) crude CLc1 was at $51.44 per barrel, up 84 cents from its last settlement.

The contracts were on track for weekly gains of more than 2 percent and 4 percent, respectively.

Chinese oil imports hit 9 million barrels per day (bpd) in September, data showed on Friday. Imports averaged 8.5 million bpd between January and September, solidifying China's position as the world's biggest oil importer. urn:newsml:reuters.com:*:nZZN074911

"We woke up with the strong data from China. That's on the supportive side," said Olivier Jakob, managing director of oil consultancy PetroMatrix.

China's huge imports have been strongly driven by purchases for its strategic petroleum reserves (SPR).

The nation has spent around $24 billion on building its crude reserves since 2015 and now holds around 850 million barrels of oil in inventory, according to the International Energy Agency (IEA). urn:newsml:reuters.com:*:nL8N1MN2GO

Unrest in Iraq, and possible U.S. action on the Iran nuclear deal, also underpinned prices.

On Friday, local television reported that tens of thousands of Kurdish fighters had deployed in the Kirkuk oil region to confront possible "threats" from Iraqi forces. urn:newsml:reuters.com:*:nL8N1MO1CS

Tensions between the two, which traders fear could impinge on oil exports from the region, have been building since Iraq's Kurds overwhelmingly backed independence in a Sept. 25 vote.

Later on Friday, U.S. President Donald Trump is expected to announce that he will not certify the 2015 Iran nuclear deal. The deal has to be re-certified every 90 days and is due for renewal on Sunday. urn:newsml:reuters.com:*:nL2N1MN1MU

The step would give the U.S. Congress 60 days to decide whether to impose sanctions, but Iran's parliament speaker told the TASS news agency that decertification would "be the end" of the deal and cause "global chaos". urn:newsml:reuters.com:*:nR4N1MG05E

"U.S. sanctions could cut off a lot of Iranian oil trade finance," Jeff Brown, president of energy consultancy FGE, told Reuters this week. urn:newsml:reuters.com:*:nL4N1MM2WA

Despite the bullish signals, analysts warned that the Organization of the Petroleum Exporting Countries needed to extend its agreement to reduce oil output beyond its current March 2018 expiry date in order to clear stocks.

OPEC, with other producers including Russia, has agreed to production cuts of 1.8 million bpd. urn:newsml:reuters.com:*:nL2N1MN09B

"OPEC-led cuts have breathed new life into oil bulls but unless the organisation digs deeper, the drawdown in global oil stockpiles will soon fizzle out," broker PVM's Stephen Brennock wrote.

TAKE A LOOK-Stories from the Reuters Global Commodities Summit
GRAPHIC: China crude oil imports   http://reut.rs/2xC6jUb
(Additional reporting by Henning Gloystein in Singapore; editing by Jason Neely and Adrian Croft) ((Libby.George@thomsonreuters.com; +44 207 542 7714; Reuters Messaging: libby.george@thomsonreuters.com))

Keywords: GLOBAL OIL/

This article appears in: Stocks , World Markets , Economy , Oil , Commodities

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