Oil prices dropped Monday over doubts that an OPEC-led plan to cut output would rein in a global oversupply that has dogged markets for over two years.
Brent crude futures were trading at $51.53 per barrel at 0511 GMT, down 40 cents or 0.77 percent, from their last settlement.
U.S. West Texas Intermediate (WTI) futures were down 44 cents or 0.88 percent, at $49.37 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) plans to agree on an output cut by the time it meets in late November. The targeted range is to cut production to a range of 32.50 million barrels per day (bpd) to 33.0 million bpd.
OPEC’s current output stands at a record 33.6 million bpd.
To achieve such an agreement among its members, some of which like Saudi Arabia and Iran are political rivals, OPEC officials are embarking on a flurry of meetings in the next six weeks, starting in Istanbul this week.
However, analysts cautioned about too high expectations about the Istanbul talks this week.
“A meeting between OPEC and non-OPEC producers (namely Russia) will add to oil headlines this week. Don’t expect a firm agreement from Russia, but headlines about cooperation are likely,” Morgan Stanley said on Monday.
“It’s also worth noting that Iraq and Iran oil ministers will not be in attendance,” the U.S. bank added.
Even if a deal is reached, analysts are unconvinced it would result in much higher prices, as doubts run high over the feasibility of a cut among rivalling members, a Reuters poll showed on Friday.
Pouring cold water on expectations, OPEC’s second biggest producer Iraq said over the weekend that it wants to raise output further in 2017.
Traders said prices were also under pressure from a rise in the U.S. rig count, implying that American producers may increase production at prices around $50 per barrel.
“Since its trough on May 27, 2016, producers have added 112 (+35 percent) oil rigs in the U.S.,” U.S. bank Goldman Sachs said.
Despite Monday’s dip, analysts said they expected slightly higher prices going forward.
Barclays Bank said that it expected “stockdraws during the upcoming winter season will support physical oil… irrespective of any decision in November in Vienna. We expect that prices will rise to the low $50 per barrel range in Q4.”
The bank said that prices would receive support into next year in part from firm U.S. gasoline demand.