Oil prices drop as investor confidence plateaus following a rally on the markets yesterday

Oil prices fell this morning after a rally which saw the price of Brent crude soar around eight per cent yesterday.

International standard Brent crude fell around one per cent to $53.92 per barrel in the early morning as worries over increased supply and poor global economic conditions helped mitigate upwards pressure from the stock market.

Prices rose around eight per cent to $54.47 yesterday as a surge in the stock market put wind in the sails of commodity investors.

Meanwhile, US standard West Texas Intermediate (WTI) fell around half a per cent this morning to $45.96, after an 8.7 per cent rise yesterday.

Both are down around 40 per cent since hitting year-highs in October.

Prices have been put under pressure by high production in the US, Russia and Saudi Arabia, with all countries coming close to, or surpassing, record output.

Earlier this month producers' cartel Opec said it would cut output by 1.2m barrels per day in a bid to stabilise the price of Brent at around $60 per barrel. However oil prices have dropped further still since then. The cuts will come into force at the beginning of the year.

"Markets need more concrete evidence on improving fundamental metrics and to bring the supply-demand relationship back to balance before oil prices can reach a real bottom," said Margaret Yang, market analyst for CMC Markets in Singapore.

Shim Hye-jin, an analyst at Samsung Securities in Seoul, said: "If Opec's cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-70 a barrel next year."