* Brent fell below $50 on Monday for the 1st time since
January
* Analysts expect further price falls despite Tuesday's
gains
* Slowing demand, falling margins add to oversupply
(Adds demand comments, updates prices)
By Henning Gloystein
SINGAPORE, Aug 4 (Reuters) - Oil prices edged up on Tuesday,
following a 5 percent drop in the previous session, as high
global production and a weakening economic outlook in Asia
prompted analysts to warn of further falls.
Oil output by the Organization of the Petroleum Exporting
Countries (OPEC) reached the highest monthly level in recent
history in July, and production could rise further if Iran
achieves a plan to raise output by 500,000 barrels per day (bpd)
as soon as sanctions are lifted. ID:nL5N10D01N
With U.S. production also near records and China's economy
showing further signs of slowing, prices on Monday were pulled
down close to the six-year lows touched at the start of 2015 and
Brent LCOc1 fell below $50 per barrel for the first time since
January. It has spent over 90 percent of the past decade above
the $50 mark. ID:nL3N10F1I8
Although prices rose on Tuesday, with Brent 35 cents higher
at $49.87 a barrel by 0647 GMT and U.S. crude Clc1 up 47 cents
at $45.64 a barrel, analysts said more falls were expected.
BMI Research said a strong U.S. dollar, China's weakening
economy, the prospect of rising Iranian oil exports would keep
downward pressure on prices in the coming months.
"A retest of Brent crude's 2015 low around $45 per barrel
looks inevitable given current ample market supply and
intensifying bearish market sentiment towards prices," the firm
said, although it added that it expected modestly higher prices
in 2016 as prices above $60 a barrel were needed for most U.S.
shale oil drillers to be profitable.
Most analysts cite oversupply as the main reason for the oil
price falls over the last year, but slowing demand is now also
adding to the downward pressure.
ANZ bank said that suggestions that cheap oil would cure
itself by spurring demand may fail to play out as consumers look
to save rather than spend.
"We'd argue the consumer is more inclined to save an
additional dollar (from cheaper oil) now than spend it," the
bank said.
"Prompt prices are being driven by demand ... and with run
cuts on the way in Asia (due to falling margins), nearby crude
prices and spreads (both in Asia and in the Atlantic Basin) will
remain under pressure," Energy Aspects said. ID:nL3N10E3FD
(Editing by Ed Davies and Anand Basu)