* OPEC mulls output cap at above 30 mln bpd -sources
* Many market participants doubt OPEC will reach deal
* Coming up: API inventory report at 4:30 p.m. EDT (2030
GMT)
(Rewrites; updates prices, market activity to settlement)
By Barani Krishnan
NEW YORK, June 1 (Reuters) - Oil settled down on Wednesday
on technical resistance at around the $50 a barrel mark, with
the market retracing most earlier declines after OPEC sources
said the group will likely consider a production curb at its
forthcoming meeting.
Reuters cited four OPEC sources as saying the Organization
of the Petroleum Exporting Countries was likely to discuss an
output ceiling at its meeting in Vienna on Thursday. Three
sources said the ceiling needs to be set substantially above 30
million barrels per day and lengthy discussions may be required.
A lower output ceiling would represent a major compromise
for OPEC, which failed to agree on a production cap for the
first time in years at its last meeting, in December.
Many market participants remain doubtful there will be such
a deal since OPEC member Iran is determined to restore crude
exports to pre-sanction levels. Analysts instead expect OPEC
members to focus on defending individual market share.
Still, the possibility of production quotas returning to
OPEC helped crude oil prices shed most of the day's declines.
"If they get a quota in place, that would certainly be
bullish for oil, given that no surprises were expected at all
from this meeting," said Phil Flynn, analyst at the Price
Futures Group in Chicago.
"It will also mark a diplomatic gesture by the Saudis after
Doha," Flynn said. OPEC failed to agree to an output freeze at
an April meeting in Doha, Qatar, after Saudi Arabia insisted
Iran join the plan.
U.S. crude's West Texas Intermediate (WTI) futures CLc1
settled down 9 cents at $49.01 a barrel, off a session low of
$47.75.
Brent futures LCOc1 fell 17 cents to settle at $49.72,
after plumbing $48.65 earlier. The session high was $50.
Technical resistance at the $50 level has kept a steady
pressure on crude futures. Brent and WTI breached the level on
Thursday, hitting seven-month highs, before returning to the $3
to $5 trading range they had been trapped in.
That trading range has persisted since prices rose $10 a
barrel, or 20 percent, between early April and May, boosted by
supply outages in Canada, Venezuela, Nigeria and Libya.
Investors will watch for preliminary data on U.S. crude
stockpiles at 4:30 p.m. EDT (2030 GMT) from trade group American
Petroleum Institute. A Reuters poll estimates a 2.7 million
barrel decline in U.S. crude stocks last week. EIA/S
Official inventory data from the U.S. Energy Information
Administration is due on Thursday.
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MAP-Oil congestion: http://tmsnrt.rs/1qkP2Gu
TAKE A LOOK-World oil gluts persists despite disruptions
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