LONDON: Oil prices fell on Wednesday on expectations of OPEC inaction on output as its focus stays firmly on market share, while concerns about China's economy weighed on the demand outlook.
Brent crude was at $49.05 per barrel at 0944 GMT, down 84 cents. U.S. crude futures were down 74 cents at $48.36 a barrel.
Traders said prices eased on concern that Middle East members of the Organization of the Petroleum Exporting Countries, which meets on Thursday to discuss policy, could continue to raise output.
Analysts said OPEC would continue to focus on defending market share instead of propping up prices by curbing output.
"The OPEC meeting in Vienna on Thursday is unlikely to see a change in the policy of maintaining market share," said Oxford Economics lead economist Patrick Dennis.
"Saudi Arabia can claim its policy has been successful with oil prices recovering at the same time as non-OPEC oil production has fallen back, leading to a more rapid global market rebalancing than expected."
Iran's representative to the OPEC said Tehran would not commit to any oil output freeze and that any discussion of rationing output would have to wait until the oil market had been stabilised.
Many Middle East oil producers have ramped up deliveries to Asia in an aggressive fight for market share.
But on the demand side, Morgan Stanley said it was worried about China.
"Our economists worry that April data showed China may be slowing ... The oil demand data from China should reinforce those concerns," the bank said.
China's official factory activity gauge expanded only marginally in May, data showed on Wednesday, while a private survey showed conditions deteriorated for a fifteenth straight month.
Chinese port congestion and the impending refinery maintenance season will also weigh on crude imports over the next few months, analysts at BMI Research said.
A Reuters poll on Tuesday showed that most traders expect only limited potential for further price gains this year as global oversupply persists.
A rise of more than 20 percent, or almost $10 per barrel, since early April, has been powered largely by supply disruptions, especially in Africa and Canada, and as overall demand remains strong despite China's slowing economy.
Comments
Comments are closed for this article.