Oil prices rise, but oversupply in focus

LONDON: Oil prices rose on Tuesday, helped by the dollar’s first daily fall in a week, but still faced their biggest monthly drop since March in the face of a global supply glut.
Expectations of more Iranian supply following a nuclear deal and concerns that economic worries in China and Europe will weigh on demand have put pressure on oil this month, stripping 11 percent off the price of crude so far in July.
The dollar was down 0.5 percent, having fallen for the first time in a week against a basket of currencies, but held just shy of three-month highs.
A rising dollar makes it more profitable for non-US investors to sell dollar-denominated assets.
“Macroeconomically, the dollar is strongly bid as people are now pretty much convinced that the Fed will hike rates this year, whether that is in September or December,” BNP Paribas analyst Harry Tchilinguirian said.
Expectations for the first rise in US interest rates in almost a decade this year have pushed the dollar up 5 percent over the last four weeks, pressuring oil.
US September crude futures, the new most-active contract, rose 87 cents on the day to $51.31 a barrel. The front-month August contract, which expires later on Tuesday, dropped below $50 on Monday for the first time since April and is down some $9 a barrel for the month.
“$50 is almost a faultline for bulls and bears to battle it out, but if you want to choke off US production, that price may have to move a bit lower. With 50 being that support level, this is where we will get some buying coming in,” Tchilinguirian added.
Brent September crude futures were up 29 cents at $56.94 a barrel by 1430 GMT, after settling down 45 cents on Monday. Brent has fallen in 10 of the last 12 months, making this its weakest period since 2008.