(Ecofin Agency) - Oil prices on Monday were close to a multi-month lows, driven by concerns about oversupply as OPEC witnessed an increased output in October and the U.S. rig count rose again.

Brent crude for January delivery was trading at $44.79 a barrel up 4 cents after decreasing by $1.09 on Friday, hitting its lowest since August 11 at $44.19.
The Organization of the Petroleum Exporting Countries (OPEC) on Friday said that its output increased to a record 33.64 million barrels per day (bpd) in October, an increase of 240,000 bpd from the previous month.

The group intends to cut or freeze output at its November 30 meeting but the market is unconvinced that such a deal will be reached and is worried that whatever agreement arrived at would not be effective.

“The estimates for OPEC production in October are between 33.5 and 33.85 million b/d. As OPEC said in Algiers that its future production ceiling would not exceed 32.5-33 million b/d it means that the organization will have to cut its output by 500,000-1,300,000 b/d. I think that OPEC has no choice but to succeed in Vienna at the end of this month. If it did not respect its commitment it would lose its credibility and prices could fall significantly. The most likely option is that there will be a deal. Will this deal be viewed as credible by the markets? Probably but not sure. It will depend on the size of the cut and on the future national quotas. If some non-OPEC countries bring their contribution it would help. The greater the reduction (OPEC plus non-OPEC), the better it will be for producers,” Francis Perrin (photo), the chairman of Strategy and Energy Policy and the Editor of Arab Oil & Gas told Ecofin Agency.

Saudi Arabia’s Energy Minister Khalid al-Falih, during the weekend said that it was vital for OPEC members to reach an agreement on initiating a deal made in September in Algiers to cut oil production.

Meanwhile, Iran on Sunday opened three oilfields with a total production of over 220,000 bpd, as it continues to increase its production.

“If there is a deal at the end of November and if it is fully implemented prices should go up. You have two scenarios for the follow up: this impact on prices could encourage OPEC countries to hold their commitments; or some countries may be inclined to increase their production too early. It is too early to tell. First things first: a deal with national quotas must be concluded; it must be credible; it must be implemented; and non-OPEC producers have to play a role,” Francis Perrin added.

Anita Fatunji