Oil declined from a one-week high in London and New York as Iraqi production advanced to a record, compounding a global supply surplus.

Prices slid as much as 2.1 percent in New York and 1.9 percent in London after their first weekly gain in two months. Iraq is pumping at an unprecedented pace of 4 million barrels a day, Oil Minister Adel Abdul Mahdi said. Oil extended losses after Chinese shares plunged the most since 2008 as regulators cracked down on margin lending.

Crude slumped almost 50 percent last year as the U.S. pumped oil at the fastest rate in more than three decades while the Organization of Petroleum Exporting Countries resisted calls to cut supply. Iraq's oil production rose to a 35-year high in December and could break more records in the coming months, according to the International Energy Agency.

"With supply exceeding demand it still seems highly likely that the market will fall further," Christopher Bellew, senior broker at Jefferies International Ltd. in London, said by e-mail. "Rallies above $50 have proved very short-lived and my expectation is for the price to move in a sideways range until the next move to the downside, which I expect to take the price to $40 or lower."

Brent for March settlement slid as much as 95 cents to $49.22 a barrel on the London-based ICE Futures Europe exchange. It gained 3.9 percent to $50.17 on Jan. 16, the highest settlement since Jan. 8. It was at $49.45 at 2:20 p.m. London time. The European benchmark crude was at a premium of $1.18 to WTI for the same month.

West Texas Intermediate for February delivery, which expires on Jan. 20, dropped as much as $1.03 to $47.66 a barrel on the New York Mercantile Exchange. The more active March future fell 85 cents to $48.28. The volume of all futures traded was 32 percent below the 100-day average for the time of day. Prices rose 0.7 percent last week.