Oil prices fell nearly 3% on Aug. 22 as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth consecutive week and prospects emerged for increased exports from Iraq and Nigeria.

Brent crude futures were down $1.36 at $49.52 per barrel (bbl) by 1326 GMT, with U.S. West Texas Intermediate (WTI) crude slipping by $1.16 to $47.36/bbl.

China's July diesel and gasoline exports soared by 181.8% and 145.2%, respectively, from the same month last year, putting pressure on refined product margins.

Because of the production and storage overhang in fuel markets, Barclays said that this month's 20% price rally is unwarranted and that oil prices of $50/bbl or higher are unsustainable.

"Oil prices will likely experience another short-term dip in the coming weeks," Barclays added.

Adding to the bearish sentiment, U.S. drillers added 10 oil rigs in the week to Aug. 19 as crude rebounded toward the $50/bbl mark that makes drilling viable.

"We expect the oil market next year to be somewhere between balanced and up to as much as 1 million barrels per day in deficit," said Bjarne Schieldrop, chief commodity analyst at Nordic bank SEB.

Schieldrop said that the 32 rigs added in August would increase supply by almost 200 Mbbl/d through 2017.

Iraq's plans this week to increase exports of Kirkuk crude by 150 Mbbl/d from northern fields weighed on prices, traders said.

Also hitting sentiment was an announcement by a Nigerian militant group that it was ready for a cease-fire and dialogue with the government. The group has claimed a wave of attacks on oil facilities in the Niger Delta. The restive southern swampland region has been rocked by attacks on oil and gas pipelines since the start of the year, reducing the OPEC member country's output by 700 Mbbl/d, down to 56 MMbbl/d.

A stronger dollar also pressured prices. The dollar index rose by 0.11%, making commodities priced in the U.S. currency more expensive for holders of other currencies.

Hedge funds and other large money managers have raised their weekly bets on rising Brent crude oil prices by the largest amount since records began in 2011, Intercontinental Exchange data showed.

Investors increased their net long positions by 63,792 contracts to 354,915 in the week to Aug. 16, the highest since mid-June.