Oil's autumn rally, which culminated in a four-year high last month, has unraveled as a rout in global equities fans concerns that fuel demand will suffer, and prices are now approaching a bear market.
"The market is discounting this expectation right now", Thorpe said.
The looming sanctions on Iran's energy sector, which go into full force November 4, have played a major part in the oil market's rally to almost four-year highs in early October. While it is unclear to what extent the impact will have on global oil markets, it could pave a path for a rebound in oil prices toward the $75-per-barrel level by the end of the year.
Total production declined two percent from the same quarter a year ago to 3.8 million barrels per day of oil equivalent, the company reported, but production was higher compared with the April-June period and is expected to increase from current levels, according to the report.
Analysts said oil prices were also supported by the upcoming USA sanctions against Iran's crude exports that will start on Nov 4. The US has allowed eight countries, including India, South Korea, and Japan, to buy limited volumes of Iranian oil as many countries may not be able to cut their purchases to zero, Bloomberg said in a report.
Both Russia and the largely-Arab bloc have worked together for two years in order to stem the 2014-2016 decline in prices and more recently, to force them higher.
Adequate oil supply and an uncertain global economic outlook also dampened sentiment.
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However, the waivers seem to be making the sanctions totally irrelevant, as the countries receiving them account for a lion's share of the oil Iran exports.
Production in the USA is now estimated to be more than 11 million barrels a day and growing.
Investors will look to official government data on USA inventories due on Wednesday.
Monthly crude oil production reached a record high in several states.
The TD Securities team have been betting on an increase in the price of oil ever since the middle of October, having bought close to $10 million of futures contracts a fortnight ago, targeting a move up to $90 per barrell.
The United States has already imposed tariffs on $250 billion worth of Chinese goods and China has responded with retaliatory duties on $110 billion worth of USA goods. The report also showed that a tanker-tracking firm estimated Iran's losses in October at 100,000 bpd.