* Major Middle East producers ramp up output ahead of OPEC
meeting
* Analysts warn of 'investor fatigue' after months of rising
oil
* Morgan Stanley (NYSE:MS) says it is worried about China's economy
By Henning Gloystein
SINGAPORE, June 1 (Reuters) - Oil prices fell early on
Wednesday as production from the major Middle East exporters was
expected to remain high or even increase just as concerns over
the state of China's economy weighed on its fuel demand outlook.
International benchmark Brent crude oil futures LCOc1 were
trading at $49.59 per barrel at 0041 GMT, down 30 cents, or 0.6
percent, from their last settlement.
U.S. West Texas Intermediate crude futures CLc1 were down
23 cents, or 0.47 percent, at $48.87 a barrel.
Traders said that the dips were a result of the prospect of
rising output from Middle East members of the Organization of
the Petroleum Exporting Countries (OPEC), which meets this week
in Vienna to discuss its market policy, which most analysts say
will continue to focus on defending market share instead of
propping up prices by controlling output.
"Many OPEC members ... have plans to grow, so cutting supply
now may interfere with those objectives," Morgan Stanley said in
a note to clients.
Many Middle East oil producers, including top exporter Saudi
Arabia but also Iraq, Iran and the United Arab Emirates have
ramped up their supplies to Asia in an aggressive fight for
market share.
But on the demand side, Morgan Stanley said that it was
worried about China's economic health.
"Our economists worry that April data showed China may be
slowing ... The oil demand data from China should reinforce
those concerns," the U.S. bank said.
British bank Barclays (LON:BARC) said that there were also signs of
"investor fatigue" in oil markets following months of heavy
inflows.
A Reuters poll this week showed that most oil investors
expect only limited potential for further price gains this year
as production continues to outpace demand.
Despite this, oil prices have risen over 20 percent, or
almost $10 dollar per barrel, since early April, largely because
of supply disruptions across the globe, and especially in Africa
and Canada, and as overall demand remains strong despite China's
slowing economy.
In the United States, the world's top oil consumer, demand
increased by 2 percent in March, compared to the same month last
year, to 19.6 million barrels per day (bpd), the highest
seasonal level since 2008, according to Barclays.