Oil futures traded lower on Wednesday on concerns that a producer meeting set for Sunday in Doha to discuss freezing output will do little to trim oversupply as well as a strengthening dollar.

Brent crude was down 41 cents at $44.28 per barrel at 1049 GMT. It hit a four-month high in the previous session before settling up $1.86.

US crude declined by 56 cents to $41.61 a barrel after gaining $1.81 a day earlier.

Comments by Saudi oil minister Ali al-Naimi in the al-Hayat newspaper in which he confirmed his country's position that an outright production cut was out of the question weighed on prices, traders said.

"Forget about this topic," al-Naimi told the paper, when asked about any possible reduction in his country's crude output.

Iranian oil minister Bijan Zanganeh does not plan to attend the Doha meeting but Iran will be sending a representative, an Iranian journalist from the Seda weekly wrote on his Twitter account on Wednesday.

Iran has said it does not plan to participate in the freeze agreement as it seeks to boost its production in the post-sanctions era.

"We believe that any agreement to freeze output which excludes Iran would largely be an acknowledgement of existing conditions at the main participants," UBS said in a note on Wednesday. "Current spare capacity is confined mainly to Saudi, and we believe that the prospects for capacity growth elsewhere within OPEC are limited - indeed some of the more peripheral producers are likely to see output decline this year (Venezuela, Algeria, Ecuador)."

But Morgan Stanley analysts said the market may still be underestimating the potential near-term headline upside risk of the Sunday meeting.

"A deal not only seems likely - as leaks and prior announcements have suggested - but confirmation of the deal, greater clarity about the freeze or hints of further OPEC action could reinforce the bullish sentiment," the bank said on Wednesday.

The Organization of the Petroleum Exporting Countries lowered its forecast of world oil demand growth by 50,000 barrels per day (bpd) and said in its monthly report on Wednesday that further downward revisions could follow.

OPEC pumped 32.25 million bpd in March, the group said citing secondary sources, up about 15,000 bpd from February.

A firmer US dollar, which makes dollar-denominated commodities more expensive for holders of other currencies and concerns over rising US crude inventories also pressured prices.

US crude stocks rose by 6.2 million barrels to 536.3 million last week, data from industry group the American Petroleum Institute showed on Tuesday, an increase that was more than three times higher than analysts expected.

Official inventory data from the Energy Information Administration (EIA) is due on Wednesday. – Reuters