(Updates market activity and comments to New York session;
changes byline and previous LONDON dateline)
* Chinese stocks fall 8 pct on Monday on growth worries
* Rising US rig count, Middle East supply add to crude glut
fears
* Speculators cut net long positions on Brent 1st time in 4
weeks
By Barani Krishnan
NEW YORK, July 27 (Reuters) - Crude oil futures hit
four-month lows on Monday after a steep drop in China's stock
markets spread concerns about the economic health of the world's
biggest energy consumer, amid evidence of a growing crude glut.
Oil was also pressured by the sharp increase in U.S.
drilling activity last week, after data on Friday showed
producers adding 21 rigs, the most in over a year, suggesting a
ramp up in output as crude futures recovered from six-year lows
seen in the first quarter. ID:nL1N1041JT
A weaker dollar .DXY on Monday cushioned some of the
losses in oil though, as crude and other commodities denominated
in the greenback saw higher demand from users of the euro
EUR= . FRX/
Chinese stocks tumbled more than 8 percent in Asian trading,
the biggest one-day drop in eight years that drove European
equities markets to a two-week low.
ID:nL3N1072VY ID:nL5N107245
Brent crude oil LCOc1 was down 95 cents, or 1.7 percent,
at $53.67 a barrel by 11:35 a.m. EDT (1535 GMT). It hit $53.33
earlier, its lowest since late March.
U.S. crude CLc1 slipped 55 cents, or 1.2 percent, to
$47.59, after hitting $47.20, its lowest since April 1.
"The combination of the Chinese stock market rout and
creeping crude glut is weighing on oil," said Carl Larry,
director of business Development for oil and gas at Frost &
Sullivan.
"That said, Brent's still seeing support above $50 and U.S.
crude is staying above $45. There's a lot of hedging going on at
those levels."
Global oil supplies remain ample, with major producers in
the Middle East Gulf competing for market share and pumping 2-3
percent more than needed, analysts say.
Exports from Iraq's southern oilfields were on track to a
monthly record, having topped 3 million barrels per day so far
this month. ID:nL5N10420C
"In the next couple of months, even if the global oversupply
and seasonal weakness are becoming priced in, it is difficult to
see where any price uplift will come from," said Societe
Generale oil analyst Michael Wittner.
Speculators have also cut their bets on a longer-term rise
in oil prices, InterContinental Exchange data showed. Hedge
funds and other money managers slashed their net long positions
on Brent for the first time in four weeks in the week to July
21. ID:nL5N1072AJ
Investors will also look to the U.S. Federal Reserve for
direction this week. The Fed on Tuesday starts a two-day policy
meeting, amid rife speculation of a September rate hike that
could boost the dollar.