Oil drops as supply glut fears resurface

After having staged a recovery on Thursday, oil benchmarks on both sides of Atlantic fell back in the red as the sentiment was hit by Nice attacks amid re-emergence of oversupply worries.

Oil awaits US rigs count data

Currently, both crude benchmarks drop over 1%, with Brent down 1.12% at $ 46.84, while WTI trades -1.03% lower at $ 45.21 levels. Oil prices failed to sustain the recovery mode and extend losses in the European morning as supply glut concerns returned to markets, outweighing upbeat Chinese economic data released earlier on the day. China Q2 GDP came in at 6.7% y/y versus expectations of 6.6%.

Analysts at BNP noted, "Changes to our oil balances and OPEC crude oil production assumptions continue to show that very little implied global stock change will occur from Q3 2016 until the end of 2017. As such, the inventory overhang built from the start of 2014 will remain largely in place, and thus continues to represent an impediment to any price rally." 

Adding to the oversupply worries, data from market intelligence firm Genscape showed a 171,511-barrel build at the Cushing, Oklahoma delivery hub for WTI futures during the week to July 12.

Markets now await the US rigs count data for fresh insights on the supply-side scenario, while a broadly subdued US dollar provides little impetus to the black gold.