Crude oil just broke $50

The August contract expires on Tuesday.

A strong dollar and a global oil supply glut have driven crude oil prices sharply lower over the past few weeks.

Oil futures fell and USA crude briefly slipped below $50 a barrel in choppy trading on Monday as ample supply, the prospect of more crude entering the market and the stronger dollar combined to pressure prices.

Brent September crude was 12 cents lower at Dollars 56.98 a barrel by 0316 GMT.

Last week, WTI tumbled 4.0 percent and Brent retreated 3.0 percent after Iran and six world powers agreed a deal curbing Tehran’s nuclear programme that aims to prevent it building an atomic bomb.

“Although the landmark deal between Iran and the big six would increase crude oil supply only in the medium term, oil prices will remain weak in the near term as Iran starts to offload crude and condensate that it holds in floating storage”, said EY analyst Sanjeev Gupta.

But not all industry data are bearish. State government data show oil production for May, the last full month for which data are available, was 1.2 million barrels per day, just shy of the all-time high of 1.22 million bpd posted in December.

“We are seeing the crude surplus moving into the oil products with elevated inventories in Europe for gasoline, naphtha and especially gasoil”.

Strong increases in refinery operations in recent months are set to slow in the second half of this year, Vienna-based consultancy JBC Energy said: “We expect global crude runs to be in the process of peaking for this year”.

A report by Baker Hughes noted that drillers in the USA reduced seven oil rigs last week following an increase for a period of two weeks.

Russian Energy Minister Alexander Novak said he will meet Opec Secretary-General Abdullah al-Badri in Moscow on July 30 to discuss oil markets and the Iran situation.

Iranian officials “also think they can export an additional 500 000 barrels per day of crude within months of sanctions removal and then another 500 000 barrels per day after that”, Platts said last week.