Business·Updated

Oil falls as Chinese factory output wanes

Oil prices fell on Monday after a report showing weak factory activity in China and near-record output of oil in Russia.

Russian produces more crude as world awaits OPEC producer conference in December

Russia is producing more crude as OPEC moves into its traditional markets. (Matthew Brown/Associated Press)

Oil prices fell on Monday after a report showing weak factory activity in China and near-record output of crude in Russia.

The  benchmark North American contract, West Texas Intermediate, fell by 44 cents to $46.15 US a barrel at the close, while Brent oil was down 77 cents to $48.79.

The oil-sensitive Canadian dollar was down 0.15 of a cent to 76.31 cents US.

Oil prices fallen by 50 per cent in the last year because slowing global demand and high output as OPEC countries ramp up production and U.S. shale producers pump out record amounts of crude.

On Monday Russia reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.

Russia is attempting to defend its market share as rivals from the Gulf start supplying Moscow's traditional markets.

The other bad news for oil was a monthly survey of factory managers in China, which showed a slowing in the outlook for the eighth straight month.

China is the world's second largest economy and prospects of slower growth in China have roiled world markets in the last two months.

At the same time, U.S. factory activity grew at its slowest pace since May 2013 as manufacturers pared their stockpiles and cut jobs.

On Friday, the U.S. oil rig count dropped to its lowest since June 2010, helping to buoy oil prices on speculation U.S. producers would cut back.

But much of oil's future direction will depend on OPEC's decisions when it gathers in Vienna on Dec. 4. OPEC produces about 40 per cent of the world's oil.

At that time Iran will officially notify the group of its plans to boost production by 500,000 barrels a day as soon as international sanctions against the Persian Gulf state are lifted.

Gary Ross, an analyst with PIRA Energy Group, who correctly predicted last year's rout in prices predicts OPEC will probably hold production steady/

"I don't think they have to do anything," Ross said, predicting the global market is moving toward balance as the U.S. pulls back and global demand creeps higher.

With files from Reuters

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