Oil prices sink back below $57 a barrel

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Profit taking has helped push prices lower (Source: Getty)

Oil prices dropped below key levels today as tensions in the Middle East eased and investors looked to take profits.

Brent crude oil futures dropped 0.8 per cent to $56.77 a barrel while US benchmark West Texas Intermediate (WTI) prices fell 0.99 per cent to $50.78 a barrel.

Malcolm Graham-Wood, analyst at Hydrocarbon Capital, said the market had run out of steam.

"There was no shortage of good news but a combination of profit taking and a lessening of geopolitical risk in Kurdistan as I reported yesterday, took the heat out of the market," he said.

Iraqi forces regained control of two major oilfields around Kirkuk from Kurdish troops this week, and they are set to come back on stream on Sunday, Retuers reported, citing Baghdad's oil ministry.

Read more: Oil prices climb on conflict in Iraq

"That was added to by Shell lifting the force majeure on Bonny Light crude exports after pipeline repairs were completed," Graham-Wood said.

In recent weeks, the Organisation of the Petroleum Exporting Countries (Opec) and others have said the long-oversupplied market is showing clear signs of rebalancing.

Opec and key non-members of the cartel have agreed to slash production by 1.8m barrels per day through March 2018 to reduce supplies.

Tags: Oil prices