Oil prices fell early on Monday as Iraq said it wanted to be exempt from any deal by producer cartel OPEC to cut production to prop up the market, and as U.S. drillers stepped up work.
International Brent crude oil futures were trading at $51.61 per barrel at 0051 GMT, down 17 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were down 20 cents at $50.56 a barrel.
Traders said the price falls were a result of comments from Iraq, which said it wanted to be exempt from a production cut by the Organization of the Petroleum Exporting Countries (OPEC) that the group plans to decide at its Nov. 30 meeting.
OPEC plans to reduce production to a range of 32.50 million to 33.0 million barrels per day, down from 33.39 million bpd in September.
That would be harder to achieve if OPEC-member Iraq, which is the group’s second-biggest producer after Saudi Arabia, didn’t participate.
Iraq ‘s deputy oil minister Fayadh al-Nema said on Sunday that the country’s oil production stood at 4.774 million bpd, with exports standing at 3.87 million bpd.
“We are not going back in any way, not by OPEC not by anybody else,” said Falah al-Amri, the head of Iraq’s State Oil Marketing Company.
“Comments by Iraq over the weekend that it may not join the OPEC agreement to cut production could see oil prices come under pressure in today’s session,” ANZ bank said on Monday.
Also pressuring the market, oil services firm Baker Hughes reported that U.S. oil rigs rose by 11 this week, the first double-digit growth since August.
On the demand side, Japan’s crude imports fell 4.6 percent in September from the same month a year earlier, to 3.27 million bpd, the Ministry of Finance said on Monday.
Despite the doubts over OPEC’s ability to cut output and weak consumption in the world’s biggest importer, analysts said that oil markets, which have been dogged by two years of oversupply, might be rebalancing in terms of production and consumption.
“Statistical balances suggest that conditions have improved markedly. We suspect that the market is moving more quickly into balance than is generally recognized,” Barclays bank said in a note to clients on Sunday.
“The market moved into a small deficit in Q3, will remain so in Q4 and then the deficit will expand significantly in 2017,” it added.