Oil prices slid on Monday on concerns about increased exports from China, Iraq and Nigeria, as well as a rising US rig count.
Brent crude, the international benchmark, fell $1.34, around 2.6 per cent, to $49.54 per barrel in mid-afternoon trading.
West Texas Intermediate crude was down as much as $1.43, 2.95 per cent, to $47.09 per barrel.
Price pressure mounted after China posted soaring increases in its July diesel and gasoline exports of 182 per cent and 145 per cent respectively, while Iraq said yesterday it will increase crude exports by around five per cent this week now it has reached an agreement to resume shipments from three Kirkuk oil fields.
This will be an increase of around 150,000 barrels of oil per day from Opec's second largest producer.
Investor sentiment was also hit by an announcement that a Nigerian militant group active in its oil-rich Niger Delta region was ready for a ceasefire and dialogue with the government, Reuters reported.
Meanwhile, US drillers also added 10 oil rigs in the week to 19 August in the eight straight week of rig additions.
The black stuff has had a bull run so far this month, after it climbed from below $42 per barrel at the beginning of August to reach $51 per barrel on Friday.
The rise occurred despite a boost in exports from the lead Opec producer, Saudi Arabia.
Opec members will meet in September to discuss a freeze in output levels in order to combat continued oversupply in the global oil market.
Barclays has warned "the stars remain misaligned for an OPEC/non-OPEC freeze agreement", with heightened animosity between Saudi Arabia and Iran making a deal unlikely, Reuters reported.
Even if an agreement is reached, analysts are sceptical that the price of Brent crude will stay above the $50 mark.
"Solid hopes of an agreement, or at least a hint to freeze the output from Opec's informal meeting due in September, should keep the downside limited in the price of a barrel of Brent at $48 and WTI at $45," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
This morning, Aim-listed Europe Oil & Gas announced it has found up to 600m barrels of oil in the Atlantic basins off the Irish coast.