Oil prices have dropped due to growing concerns that recent rallies in the third quarter may not continue, having previously helped the crude market.
Brent crude futures LCOc1 slipped 22 cents to $55.78 a barrel, while the US West Texas Intermediate (WTI) crude futures CLc1 fell 26 cents to $50.16 per barrel, reported Reuters.
Traders said that the third-quarter market rally that improved Brent prices to its mid-2015 levels by late-September had been overdone.
Saxo Bank commodity strategy head Ole Hansen was quoted by the news agency as saying: “Fundamentals may not yet be strong enough to support a continued rally, especially in growth-dependent commodities such as oil.”
Traders also said that the oil market has started rebalancing driven by strong demand and the ongoing initiative by the Organization of the Petroleum Exporting Countries (OPEC) and other countries to cut production by nearly 1.8 million barrels per day (bpd).
Started in January, the deal to curb output will continue to 31 March next year.
However, rising production in the US restricted oil prices from further improvement.
In September, oil production in the country reached 9.55 million bpd.
Energy services firm Baker Hughes reported that oil drillers in the US have added six oil rigs in the week ending 29 September to increase the total to 750, indicating further increase in production.