(MENAFN- The Peninsula) Oil prices edged lower on Tuesday, dragged down by a firm dollar and ample supply of both crude and refined products.
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 prices this month.
Brent September crude was 14 cents lower at $56.51 a barrel by 0326 GMT, after settling 45 cents lower on Monday. The contract has shed about $7 so far this month.
U.S. August crude, set to expire on Tuesday, fell 19 cents to 49.96 a barrel. The front-month contract fell below $50 a barrel on Monday for the first time since April and is down some $9 a barrel for the month.
"Pessimism about oil prices because of the Iran nuclear deal and economic concern about China and Europe are overblown," analysts at PIRA Energy said.
The consulting firm expects first incremental oil from Iran to come to market in the second quarter of next year, with production rising from around 3 million barrels per day (bpd) now to full capacity of 3.5 million bpd by the end of next year.
Prices have come under further pressure this week from a strengthening dollar, which is trading close to three-month highs on expectations of higher U.S. interest rates.
A firm dollar makes crude more expensive for investors using other currencies, while higher interest rates is seen as drying up liquidity, possibly weighing on appetite for commodities.
U.S. commercial crude oil stocks likely fell about 2.1 million barrels in the week ended July 17, according to a preliminary Reuters survey.
The Reuters poll was taken ahead of weekly inventory reports from the American Petroleum Institute (API) due at 2030 GMT and the U.S. Energy Information Administration (EIA) due Wednesday.
Analysts at ANZ, however, said "expectations of another increase in inventories at Cushing are keeping downward pressure on prices".
In the week to July 10, crude stocks at the Cushing, Oklahoma, delivery hub for crude futures rose 438,000 barrels, according to EIA data.
In China, diesel sales fell in June on slower economic growth and a rebound in oil prices, two state refining sources said, threatening to add to a global fuel glut as the country exports what it cannot absorb.
Saudi Arabia's domestic crude oil inventories jumped to a record in May, although the rise likely reflected the operational demands of a major new refinery rather than another sign of a global supply glut.
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