Oil prices fell sharply on Monday after Greece rejected bailout terms and as China rolled out emergency measures to prevent a full-blown stock market crash, adding to worries about poor demand growth amid global oversupply.
"Uncertainty over Greece is bearish for oil. It adds an extra negative factor on top of the turmoil in Chinese financial markets, the recent rise in US drilling rigs, and a potential increase in Iranian oil supply," said Olivier Jakob, senior energy analyst at Petromatrix in Zug, Switzerland, Reuters reported.
International benchmark Brent futures were down over a percentage point at $59.56 per barrel at 0520 GMT, and US crude futures CLc1 were at $54.84 a barrel, down over $2 since they last traded before the July 4 national holiday.
The falls meant that both crude futures were at their lowest levels since mid-April. US drilling increased for the first time after 29 weeks of declines, the strongest sign, yet the higher crude prices are coaxing producers back to the well pad.
Production in Russia and the Organization of Petroleum Exporting Countries is also at or near records.
Putting further pressure on oil markets is a possible nuclear deal between global powers and Iran, which could add more oil to oversupplied markets if sanctions are eased.
"Reports increasingly suggest a deal is likely ... Western officials also reiterated the deadline won't be extended again, and significant progress has been made recently," Morgan Stanley said on Monday.
