Investing.com - Oil prices plunged in North American trade on Wednesday, extending sharp overnight losses amid speculation a meeting of key oil producers later this week will end without a decision that would lead to major changes in production.
The Organization of the Petroleum Exporting Countries will meet on Thursday in Vienna although no dramatic announcement on a production cut is expected.
The oil cartel’s most recent meeting in Qatar in April ended without agreement to freeze output at current levels due to Saudi Arabia's insistence that Iran be part of the agreement.
United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui said Tuesday that the oil market has been correcting upwards of late and that he is happy with the market's current state. The comments were seen as lowering the probability that OPEC will enact a comprehensive production freeze.
On the ICE Futures Exchange in London, Brent oil for August delivery sank to a session low of $48.65 a barrel, the weakest level since May 24. It last stood at $49.03 by 14:31GMT, or 10:31AM ET, down 86 cents, or 1.72%.
A day earlier, London-traded Brent futures lost 47 cents, or 0.93%, as market players focused on rising output from Middle East producers.
According to recent reports, Iraq plans to ship 5 million extra barrels of crude in June. Saudi Arabia, Kuwait, Iran and the United Arab Emirates are also planning to increase supplies later this year.
Last Thursday, Brent prices jumped to a near eight-month peak of $50.96 as unplanned supply disruptions in Nigeria eased concerns over a global glut.
Brent futures prices are up by roughly 85% since briefly dropping below $30 a barrel in mid-February.
Elsewhere, crude oil for July delivery on the New York Mercantile Exchange slumped 95 cent, or 1.93%, to trade at $48.15 a barrel after sliding to $47.75, a level not seen since May 24. On Tuesday, New York-traded oil prices dropped 23 cents, or 0.47%.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products. The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show crude stockpiles fall by 2.7 million barrels in the week ended May 27.
The reports come out one day later than usual due to the Memorial Day holiday in the U.S. on Monday.
Nymex prices rallied to $50.21 last Thursday, the most since October 9. U.S. crude futures are up nearly 80% since falling to 13-year lows at $26.05 on February 11 as a decline in U.S. shale production boosted sentiment.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. fell by two to 316 in the latest reporting week, keeping up a broad trend of declines.
Meanwhile, Brent's premium to the WTI crude contract stood at 88 cents a barrel, compared to a gap of 79 cents by close of trade on Tuesday.