Wednesday 01 June 2016 9:13 am

Oil slides away from $50 ahead of Opec meeting

Oil prices fell away from $50 this morning, as production from major Middle Eastern exporters was expected to remain high or even increase.

Middle Eastern oil producers have been ramping up their supplies to Asia in an aggressive tussle over market share. It comes ahead of a meeting of the Organisation of Petroleum Exporting Countries (Opec) tomorrow.

"Many Opec members … have plans to grow, so cutting supply now may interfere with those objectives," Morgan Stanley said.

Brent crude, the global benchmark, fell 0.9 per cent to $49.4 per barrel this morning. West Texas Intermediate, the US benchmark, also slumped 0.9 per cent to $48.6.

Traders will also be eyeing the API weekly crude oil stock data due out later today.

Iraq recently said it intended to raise its oil exports ahead of Thursday's meeting in Vienna. Iran, Kuwait, Saudi Arabia and the United Arab Emirates are also set to raise their supplies in the third quarter.

Most analysts don't expect the meeting to yield a change in Opec's policy of defending its market share. It's the first time since Opec and non-Opec members failed to agree a widely-anticipated freeze deal in April.

"We don't think any substantive agreement is going to emerge from the talks… we see little appetite among the key countries to have another go at overcoming the differences and divisions within the group," Richard Mallinson, geopolitical risk analyst at Energy Aspects, told City A.M.

Oil pushed through $50 for the first time in around seven months last week due to outages in Canada, Libya and West Africa.

Venezuelan energy minister, Eulogio Del Pino, today said that Opec has effectively frozen output because its overall production held steady in the past few months.

"Production has been frozen … Because if you see the decline in the non-OPEC and all the situation that happened in several countries, production has been maintained the same in the last three or four months," Del Pino said.