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Oil market 'more fragile' than prices show: Citi

U.S. oil prices of around $20 per barrel could still happen, Citigroup's Ed Morse, said Thursday as crude briefly hit 12-year lows of just over $32 per barrel.

"You never know where the bottom is," Morse told CNBC's "Squawk Box." He said the recent tumble has been more severe than he'd anticipated. "We think the pressure is still going to be on for lower prices," he added.

West Texas Intermediate crude was falling around 3 percent early Thursday, after a decline of 5.5 percent on Wednesday.

China's stock rout this week sparked new concerns about a slowdown in the world's second-largest economy and what that might mean for global oil demand at a time of near-record production and massive crude stockpiles.

Read MoreOil slides further as China turmoil rattles investors

"The market is itself much more fragile than the price of oil would indicate," said Morse, Citi's global head of commodities research. He added that any supply disruptions due to political uncertainty in Venezuela, Nigeria or Iraq, for example, could just as easily send oil prices higher.

"We have like a 95 million barrel-per-day market. And maybe, a million and a half barrels a day of oversupply right now. That's 2 percent — 2 percent at a time when the Saudis are producing all out," he said.

Noting that narrow oversupply margin, oil magnate T. Boone Pickens told CNBC Wednesday that it would not take much to balance the oil market.

Read MoreBoone Pickens to Cramer: Oil is close to bottoming

Morse agreed with Pickens on that point. "We think the market is going to balance ... by the end of the year." To get there, Morse predicted that production will finally be cut, with U.S. producers bearing the brunt of the lost output.

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