"A war for output market share means oil prices are skewed to the downside. Funds are unwinding a large positive investment premium, but further selling is possible," ANZ said on Thursday.
Brent crude oil was down $1.48 at $47.21 a barrel at 1007 GMT (3:37 p.m. in India), at a discount to US crude, which was trading at $47.60 a barrel, down 88 cents.
Iraq plans to boost monthly crude oil exports from its southern ports to a record high level in February, trade sources said on Thursday.
Iraq's State Oil Marketing Organization has allocated 3.3 million barrels per day (bpd) of Basra crude to be shipped out in February, up from 2.7 million bpd in January, they said, citing a preliminary loading programme.
Brent has traded at a premium above US crude in recent years, however the seaborne crude oil spot market, which Brent represents, has come under huge amounts of pressure in recent weeks as supply has built up in the Atlantic basin.
Brent surged 4.5 per cent on Wednesday, its biggest percentage gain since June 2012, as traders covered themselves on expiring options.
However, market sentiment remains bearish due to a supply glut. US crude has been cheaper than Brent because soaring North American shale oil production has pulled down prices while the rest of the world market remained more tightly supplied.
But with oil producer club OPEC deciding late last year to maintain its output despite slowing Asian and European economies in order to defend its market share, including against surging US competition, a glut has also appeared outside the United States.
"We are lowering our Brent price forecast: to $50.25/barrel from $72.25/barrel in 2015; to $67.50/barrel from $83/barrel in 2016; and to $77.25/barrel from $90/barrel in 2017," US investment bank Jefferies International said on Thursday.
Adding to the downward pressure on prices, Russian output has reached levels not since seen the end of the Soviet Union.
ANZ bank said that it saw a 60 per cent chance Brent would range between $40 and $60 a barrel in the first half of the year, a 30 per cent possibility of prices falling to $35-45 during that time and only a 10 per cent chance of prices going up to $60-80 a barrel.
Copyright @ Thomson Reuters 2015