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UPDATE 15-Oil surges on hopes for output cuts to trim glut

* Iraq sees some flexibility for OPEC, non-OPEC deal * API data shows larger-than-expected inventory build * Hess, Continental, Noble slash 2016 capital spending (New throughout, updates prices and market activity following API numbers) By Devika Krishna Kumar NEW YORK, Jan 26 (Reuters) – Oil prices surged on Tuesday, settling more than 4 percent higher as investors found reasons to hope for output cuts that could eventually reduce one of the biggest global supply gluts in dec

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