Oil prices have dropped after investors weighed up the negatives of an output freeze proposal by major oil producing countries.

Brent crude futures LCOc1 fell 47 cents at $48.76 a barrel, while the US West Texas Intermediate (WTI) crude CLc1 slid 18 cents at $46.40 a barrel, Reuters reported.

Following speculations that major oil producers within and outside of the Organization of the Petroleum Exporting Countries (OPEC) are set to agree on output reduction, prices since last month increased by nearly 20%.

SEB commodities strategist Bjarne Schieldrop told the news agency: "The market is totally dominated by short speculators facing OPEC talk."

"The market is totally dominated by short speculators facing OPEC talk."

Some OPEC members are fighting to gain market share, with market watchers doubtful that discussions to cut oversupply by freezing output levels may not be successful.

During a meeting held by the OPEC members in June this year, producers failed to reach an agreement to limit production. Since then the cartel’s output increased.

A survey conducted by the news agency last month showed oil output by OPEC was likely to have reached its highest in recent history last month because of increase in production in Iraq.

Despite militant attacks, Nigeria also managed to export additional crude.

Meanwhile, traders are watching for weekly US oil inventory data to be released by Energy Information Administration, which may show the glut in crude and oil products supplies had widened.