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Tuesday 24 Nov 2015 - 11:07 Makkah mean time-12-2-1437
London, (IINA) - The price of Brent oil held steady at about $43 per barrel on Monday; however, the outlook remains robust in the oil market with the slowdown in the Chinese economy and concerns over the glut of crude supply, World Bulletin reported citing an analyst.
The price of the global benchmark Brent crude oil opened at $44.36 per barrel but fell to $43.70 a barrel around 7:30 GMT, which is nearly the lowest price seen in seven years.
Goldman Sachs analyst Michele Della Vigna told the Today program on BBC's Radio 4 on Monday that oil could fall to as little as $20 per barrel; however, there is only a 15 percent probability it might happen.
The economic slowdown in China, the world's second-largest economy and one of the most prominent importers of crude oil in the world, is one factor of making the demand cuts.
However, Julian Evans-Pritchard, China economist in Capital Economics Singapore, told Anadolu Agency that the volume of oil imports has risen in China, as refineries are taking advantage of low prices to stockpile the commodity.
Meanwhile, crude oil inventories in the US increased for an eighth straight week, the US' Energy Information Administration said last Wednesday.
Although the rise in US crude stocks was smaller last week, compared with that of previous weeks, the large amount of stock, which stand at 487.3 million barrels, is another factor contributing to the low price of oil.
The analyst said that another factor that could push oil prices higher is the drop in oil rigs numbers in the US last week.
Data from oilfield services company Baker Hughes last Friday showed that the number of US oil rigs, which provides an indication of the well-being of the oil sector in the country, has fallen once again.
The oil rig count in the US has declined in 11 weeks of the past three months while the total number of oil rigs has fallen by 64 percent since October 2014 when the rig count was at its highest level with 1,609.
U.S. oil producers are waiting for prices to pick up in order to add more rigs. Domestic oil output in the U.S. had fallen by 500,000 barrels per day (bpd) on average since April this year, when production peaked at 9.6 million bpd.
Saudi Arabia and Iraq, the two biggest oil producers of OPEC, increased their output significantly from last year, with production last month standing at 10.2 million and 4 million bpd respectively.
The oil industry awaits the biannual OPEC meeting that will be held in Vienna on December 4.
In its last two meetings, OPEC refused to cut production to raise falling oil prices. There are still no signs from Saudi Arabia, Kuwait and the United Arab Emirates of any intention of reducing output. The producers have made it clear that they feel reducing production would lead to a loss in market share.
In addition, Iran is preparing to return to the oil market, expecting sanctions on the country to be lifted sometime early next year.
Tehran has repeatedly said it will increase its oil output by 500,000 bpd immediately after the sanctions are lifted and by another 500,000 bpd within the following six months, which could increase the glut of supply in the oil market, and pressure oil prices even lower.
AG/IINA
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