Oil prices fell 3% on Monday as Iraq announced record-high oil production feeding into a heavily oversupplied market, wiping out much of the gains made in one of the biggest-ever daily rallies last week.
Brent crude, the global benchmark, was down 90 cents at $31.28 a barrel by 1440 GMT (9:40 a.m. EST), losing 2.8% from its closing price on Friday, when Brent surged 10%.
U.S. crude traded $1.07 lower at $31.12 a barrel.
The losses came despite news that oil producer group OPEC was evaluating holding an extraordinary meeting. Qatar's energy minister said a request for such a gathering was being discussed.
Oil prices remain near 12-year lows as global supply continues to outstrip demand.
Iraq's oil ministry told Reuters on Monday oil output had reached a record high in December. Its fields in the central and southern regions produced as much as 4.13 million barrels a day, the government said.
A senior Iraqi oil official said separately the country may raise output even further this year.
"The news that Iraq has probably hit another record builds on the oversupply sentiment," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
"The oversupply will keep markets depressed and prices low, and on the other hand short positions are in excessive territory," he said.