Oil prices shed more than $1 per barrel today with Brent crude falling back below $56 due to more drilling activity in the US and higher output among producers in the Organisation of the Petroleum Exporting Countries (Opec).
Brent crude futures fell 2.13 per cent to $55.58 per barrel while West Texas Intermediate (WTI) prices dropped 2.65 per cent to $50.30 per barrel.
This follows a rally in oil prices which brought about the biggest third-quarter gain in 13 years and pushed Brent crude prices up to a more than two-year high last week.
Prices lifted higher as Opec's production cuts showed evidence of cutting the global supply glut and as tensions in Kurdistan mounted following an independence referendum.
However, a Reuters survey on Friday found output among Opec members rose in September, mostly due to higher supplies from Iraq and Libya.
Adding to the bearish sentiment, data from the US showed energy firms added oil rigs for the first time in seven weeks last week.
"The US rig count shows increased drilling activity after weeks of stalling," said Norbert Ruecker, head of macro and commodity research at Julius Baer.
"While this is unlikely the consequence of the latest oil price surge, it nevertheless fits the expectations that the shale business once again could swiftly respond to higher prices.
"We see oil’s surge as a temporary swing driven by sentiment and geopolitical concerns. Fundamentally, the market is entering a soft patch as the summer driving season wraps up and refineries slow crude oil purchase for maintenance reasons. Today’s elevated price levels incentivise US exports in the short term and additional shale production in the medium term."
Read more: Oil prices rise on tensions in Kurdistan