Oil fell towards $49 a barrel yesterday, pressured by high output from Middle East Opec members and as a stronger US dollar weighed on commodities.
Iraq, which has exported more crude from its southern ports in August, will continue ramping up output, its oil minister said during the weekend.
Top exporter Saudi Arabia has kept output at around record levels this month.
Brent crude was 85 cents lower at $49.07 a barrel in London trade and the global benchmark is down more than 7% from its 2016 peak of $52.86 reached on June 9.
US crude was also down 85 cents, at $46.79.
“A much stronger US dollar is causing selling pressure today,” said Carsten Fritsch of Commerzbank. “Speculative financial investors, in particular, are likely to use this as an opportunity to take profits,” he said.
The US currency rose to a three-week high against the yen after the US Federal Reserve bolstered expectations that it would increase interest rates soon.
A rise in the dollar makes dollar-priced commodities such as crude more expensive for holders of other currencies, and tends to put downward pressure on oil prices.
The comments about high oil output have dampened expectations that Opec and outside producers such as Russia will agree steps next month to support prices such as a production freeze, following the collapse of a similar effort in April.
“The market is increasingly likely to discount the outcome of the event, given, even in the instance of a freeze being agreed, compliance will be an issue,” Barclays said in a report.
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