Iraq agrees deals with BP and Shell to restart shelved projects, report says

Iraq and a group of major oil companies including BP and Royal Dutch Shell have agreed to resume production of several development projects in the country that had been mothballed due to low oil prices, reports revealed on Thursday.

Iraq oil officials have come to agreements with BP, Shell and Russia's Lukoil to restart investing in oil field developments that are expected to see crude production increase next year, Reuters reported.

The Iraqi officials suggested the country's crude output should increase by 250,000-350,000 barrels per day (bpd) in 2017 from the current 4.6m bpd, adding to existing oversupply concerns.

On Thursday oil prices were on the slide again, while the market continued to digest the US Energy Information Administration revised its outlook for US crude production higher.

West Texas Intermediate crude was 0.4% lower to $41.54 per barrel and Brent was at $43.99.

Oil prices have recently entered what analysts at RBC Capital Markets called "a sort of bear trap", as despite daily global supply nearing the point where its overhang turns to a deficit, "a deluge of bearish headlines has kept the market on its heels".

2016 has seen the 'fragile five' sovereign producers - Iraq, Algeria, Nigeria, Libya, and Venezuela - struggle, while traders worry that Nigeria and Libya will soon add to the oversupply.

RBC believes the most significant bearish risks are overdone or have already been largely priced in.

"We maintain our conviction that oil prices will grind higher through the balance of this year and into next (even if choppy in the near term), barring a significant deterioration in the 'macroverse'," analysts wrote on Wednesday.

"In our view, investors should remain cognizant of the distress remaining across much of OPEC (namely Nigeria and Libya) and should side-step the numerous bear traps lurking in the market."