OIL: Prices stabilise after Monday fall on Greece, China

Crude oil prices stabilised on Tuesday following the steep declines recorded on Monday in the aftermath of the Greek referendum that rejected terms for a new bailout and the continued retraction of the Chinese stock market.

US crude WTI traded up 44c at $52.97 a barrel early on Tuesday, following Monday’s 7.7% fall or $4.40 to $52.43 from its close last Thursday and prior to the three-day holiday for the Fourth of July.
This was the biggest daily percentage since February, and more downside momentum could push it to test the six-year low of $42.03 set in mid-March, technical analysts were quoted as saying.
“The close below $56.80 last week was an indicator to expect further downside pressures,” said Jameel Ahmad, Chief Market Analyst at forex trader FXTM.
“Investor sentiment is continually plagued by oversupply concerns, and the news that progress on Iran’s nuclear programme has been made will also weaken investor sentiment towards WTI. This is because progress on a deal being reached means we are stepping closer to economic sanctions in Iran being lifted, which ultimately means that for the oil markets, the oversupply will increase even further.
“These concerns have already returned to elevated levels anyway following the previous comments from the Energy Information Administration (EIA) that US stockpiles are rising, being validated by recent inventory data,” Ahmad concluded.
Meanwhile, Brent was up 63c at $57.17 on Tuesday, following Monday’s 6% drop.
The outlook for oil demand also looks grim especially at key consumer China, where a 30% slump in stock markets since June prompted the government to resort to an unprecedented series of support measures over the weekend to stabilise shares.