Oil steadies as dollar eases, but oversupply in focus

[July 21, 2015]  By Amanda Cooper

LONDON (Reuters) - Oil prices steadied on Tuesday, helped by the dollar's first daily fall in a week, but remained set for 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.

Brent crude edged off session lows, lifted by comments from U.S. Secretary of State John Kerry, who said Iranian Supreme Leader Ali Khamenei's vow at the weekend to defy American policies in the region was "very disturbing".

"The Kerry comments are worrying," said Tamas Varga, analyst at London brokerage PVM Oil Associates.

"They suggest implementing the Iran nuclear deal may not be as straightforward as it originally seemed, and maybe therefore Iranian oil exports could reach the market more slowly than expected."
 

Varga said he expected the next move for crude to be downwards and saw the next target at $55.60 for Brent.

Brent September crude futures were 4 cents lower at $56.61 a barrel by 1056 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.

U.S. August crude <CLc1>, set to expire on Tuesday, fell 5 cents to $50.10 a barrel. The front-month contract dropped below $50 on Monday for the first time since April and is down some $9 a barrel for the month.

Last week, the International Energy Agency said it expected global oil demand growth to slow next year to 1.2 million barrels per day (bpd) from 1.4 million bpd this year - far less than needed to balance stubbornly growing supply, including the potential influx of Iranian crude.

Barclays' team of energy analysts said they believed the impact of additional supply from Iran, which has some 40 million barrels of oil in floating storage alone, might not be as severe as some have feared.

Investor expectations for the first U.S. rate rise in almost a decade this year have pushed the dollar up 5 percent over the last four weeks, pressuring oil.

The dollar was down 0.1 percent on Tuesday, 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-U.S. investors to sell dollar-denominated assets.

(Additional reporting by Jacob Gronholt-Pedersen in Singapore; Editing by Christopher Johnson and Dale Hudson)

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