Crude oil prices slipped back on Monday after hitting an eight-week high following their longest run of gains in four years, breaking through the $50 a barrel barrier.
Investors were responding to news that US shale oil drillers continue to add more rigs.
Iraq also plans to increase exports from Kirkuk by 150,000 barrels per day and a Nigerian militant group, which has been disrupting production in the Niger Delta, has said it is ready for a ceasefire and dialogue with the government.
Why we announced ceasefire – Niger Delta Avengers https://t.co/zILHpN5Sqg— The Punch Newspapers (@MobilePunch) August 22, 2016
There are also Iran’s ambitions to restore its crude output to pre-sanctions levels. Simon French, Chief Economist with Panmore Gordon, said: “Clearly Iran, having come back onto the global market place, wants to start to scale up production and will be very reluctant to do a production cap, something that they indicated back in April. What has changed in the intervening months, I’d argue very little.”
Prices had been pushed up recently by speculation Saudi Arabia and the rest of OPEC might agree with Russia and other non-OPEC members to limit production.
They are due to hold informal talks in Algeria in late September but oil industry analysts do not think crude can stay above $50 a barrel in the near term.
“We continue to view a meaningful OPEC production agreement as highly unlikely,” Wall Street investment bank Morgan Stanley said in a note.
“It is unlikely Riyadh will take any freeze negotiation seriously as officials believe the market share policy is slowly but surely working,” Morgan Stanley said. That was a reference to Saudi Arabia’s policy of defending its market share regardless of how low the price dips.