Oil prices on Tuesday fell from one-year highs touched the previous day as there were doubts that a planned production cut would have the desired effect of reining in global oversupply.

Oil prices jumped as much as 3 per cent on Monday, with Brent hitting a one-year peak, after Russia and Saudi Arabia both said a deal between Opec and non-Opec members like Russia in curbing crude output was possible.

However, Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a “greater possibility”, markets were unlikely to rebalance next year.

"Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," the US bank said, and added that even if Opec producers and Russia implemented strict cuts higher prices would allow US shale drillers to raise output.

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International Brent crude oil futures were trading early at $52.84 per barrel , down 30 cent from their previous close, and below Monday’s $53.73 one-year high.

US West Texas Intermediate (WTI) crude futures were at $51.09 a barrel, 26 cent lower than their last close, down from Monday's high of $51.60.

Carsten Fritsch of Germany's Commerzbank said "the expectations of an Opec production cut surely played a role" in the recent price rises of the futures market, where large volumes of new long-positions have been built up as the market becomes increasingly confident about rising oil markets.

However, sounding a note of caution, Mr Fritsch said he had “significant doubts whether they [production cut targets] will actually be fulfilled” as rivalry between Opec members could prevent an effective deal. – (Reuters)