* Iran says it won't agree on output restraint
* Strong Middle East output comes as China's demand seems to
slow
By Henning Gloystein
SINGAPORE, June 2 (Reuters) - Oil prices fell early on
Thursday as a row between Saudi Arabia and Iran made it unlikely
that the OPEC would agree any output constraints during a
meeting in Vienna, just as demand worries from China resurfaced.
International Brent crude oil futures LCOc1 were trading
at $49.58 per barrel at 0053 GMT, down 14 cents from their last
settlement, while U.S. West Texas Intermediate (WTI) crude
CLc1 was down 26 cents at $48.75 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC)
is set for another showdown between rivals Saudi Arabia and Iran
when it meets on Thursday in the Austrian capital, with Riyadh
trying to revive coordinated action or a formal oil output
target, but Tehran rejecting both ideas.
"An output ceiling has no benefit to us," said Iranian Oil
Minister Bijan Zanganeh upon arriving in Vienna ahead of OPEC's
regular meeting on Thursday.
Driven largely by rising output from the Middle East, OPEC's
output is near record highs of over 32.5 million barrels per day
(bpd), although there have been some disruptions, especially in
Nigeria and Libya.
The spat between leading Saudi Arabia and Iran comes just as
concerns have resurfaced over China's demand.
"OPEC members will be keeping a close eye on China, with the
low factory activity data that has been released possibly
signalling a diminishing demand for oil - something that could
do real damage to oil prices," said Mihir Kapadia, CEO at Sun
Global Investments.
Car sales in China, an important gauge for gasoline and, by
extension, crude oil demand, have also falllen by almost a
quarter since the end of 2015 to 2.12 million new registered
vehicles in April. aCNDSLSAUT
Despite the price falls, low cost producers, especially in
the Middle East, are feeling less inclined to restrain output as
overall market conditions have improved significantly for
exporters this year.
"With oil prices having rallied considerably since the
abysmal start to the year ... (OPEC) delegates are unlikely to
be forced into extreme action," Kapadia said.
Although prices are resisting a break above $50 per barrel,
Brent is still 80 percent above a more than a decade low it hit
in January.