* Softer dollar helps oil edge up
* U.S. crude stocks rise against expectations
* OPEC members say price drop will be short-term
(Updates prices)
By Amanda Cooper
LONDON, July 23 (Reuters) - Oil prices edged higher on
Thursday, aided by a drop in the dollar, although rising
supplies of crude oil in the United States kept the futures
market in a tight range.
Crude oil stocks in the United States rose by 2.5 million
barrels last week to above the five-year seasonal average,
according to data from the Energy Information Administration
(EIA), trumping expectations for a drop of 2.3 millions.
U.S. September crude futures CLc1 were 31 cents higher at
$49.50 by 1401 GMT, having fallen by $1.67 on Wednesday to
settle below $50 for the first time since April.
Brent crude LCOc1 was up 11 cents at $56.24 a barrel.
The price of Brent has fallen by about 12 percent in July,
its largest monthly fall since March, pummelled by concern about
the ability of the global economy to absorb a surplus of oil.
The oil glut looks set to grow as an Iranian nuclear deal
with the West is expected to release millions of barrels of
additional supply onto world markets. ID:nL1N1002DS
"The issue is the surplus in oil rising despite (evidence of
seasonal demand) so (oil) is finding some pressure coming from
that surplus," Natixis energy analyst Abhishek Deshpande said.
"Brent is overvalued for now at $56 and a surplus of 2
million barrels per day ... had the market been balanced, I
would say $60 is required."
Adding to the prospect of this surplus persisting, OPEC
delegates from Gulf states and other nations say that the recent
drop in prices is likely to be short-term. They say that lower
prices will not deter the cartel from keeping output high to
defend market share. ID:nL5N10139W
The dollar headed for its first weekly loss in a month
.DXY but held near a three-month high, which tends to make it
more profitable for non-U.S. investors to sell
dollar-denominated assets such as oil or gold.
"Fundamentally, there's not a lot to change the picture
dramatically in the short term. Prices seem to be contained in a
range for now," said Ben Le Brun, market analyst at
OptionsXpress in Sydney.
Volatility in the oil price has calmed this week. Brent has
seen a difference of only $1.54 between this week's intraday
high and low, the narrowest range since the last week in 2013.