Oil falls towards US$49 on high output, strong dollar

Oil production estimates in the same time frame stood at around 8.5 million barrels per day (mbpd), while United States crude oil inventories increased by 2.5 mbpd for the week ending August19. Kurdish forces then took control of nearby Kirkuk oil fields and started shipping crude from the area through their export pipeline network running to Turkey's port of Ceyhan.

Investors moved in to pick up bargains Tuesday and at about 0715 GMT, US benchmark West Texas Intermediate rose 10 cents, or 0.21 percent, to $47.08, while Brent was four cents, or 0.08 percent, up at $49.30.

A key driver for the oil markets in the coming weeks would be any new rhetoric from members of the Organization of the Petroleum Exporting Countries, who are slated to have an informal meeting next month to discuss the oil markets.

Yet doubts of agreement in talks on an output freeze among members of oil cartel Opec continues to weigh on prices.

But Smith noted that Saudi Arabia's crude production has recently hit a record high.

The comments about high oil output have dampened expectations that Opec and outside producers such as Russian Federation will agree steps next month to support prices such as a production freeze, following the collapse of a similar effort in April.

Saudi Arabian Energy Minister Khalid Al-Falih told Reuters last week he did not believe an intervention in oil markets was necessary since the "market is moving in the right direction".

"Yes, we have storm concerns but they are not really affecting production as much as the market bulls would like". Iran should be let to recoup its share of global sales, he said. According to ClipperData research, the country's exports have also increased by about 1 million barrels per day since early 2015.

Also weighing on prices were statements from Iran, which said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognised Tehran's right to regain market share lost during worldwide sanctions that were only lifted in January. It's now pumping about 3.85 million barrels a day, Zanganeh told Fars news agency on August 10.

"Most of the OPEC countries are sending a signal that they re open to freezing production, but you have to remember that majority are producing at peak levels", BMI Research oil and gas analyst Peter Lee told AFP. "Iran is making it very explicit: We are not going do any freeze deal unless we are back to 4 MMbbl".

"If Iran's not in the agreement, that torpedoes it", he said.

  • Anthony Vega