Oil prices edged lower on Wednesday as hopes of an output freeze at the upcoming OPEC meeting in Vienna faded following hints from major producers of increased exports in a bid to protect market share.
Brent crude (LCOc1) shed $0.84 to trade lower at $49.05 per barrel at 0944 GMT. U.S. crude futures (CLc1), meanwhile, gave up $0.74 at $48.36 a barrel.
Market players said oil prices eased on worries that some members of the Organization of the Petroleum Exporting Countries, which will meet tomorrow to discuss policy, may continue to increase output to defend their respective market shares.
Iran, which has repeated said it will not participate in any output freeze agreement until its exports are back to 2012 levels, said that any discussion of limiting output would have to be delayed until the global oil market stabilized.
Several Middle Eastern oil exporters have ramped up deliveries to buyers in Asia in an aggressive move to protect its market share.
Meanwhile, analysts point out that the increased output from the Middle East is only making things worse as China’s need for oil appears to be falling as its factory activity has slowed for a fifteenth consecutive month.
Official figures show that Chinese factory activity expanded marginally in the month of May.