Oil futures extended declines in European trading on Monday (25 July) on oversupply fears, while precious metals headed lower on the strengthening of the dollar.

At 1.27pm BST, the Brent front month futures contract was down 1.07% or 49 cents to $45.20 per barrel, while the West Texas Intermediate was down 1.20% or 53 cents to $43.66 per barrel, as oil market imbalance continued to weigh on trading sentiment.

With growing evidence of rising oil production in the Middle East, investment bank Goldman Sachs predicted an acceleration in Russian production as well, with the country's output touching 11.7 million barrels a day (bpd) by 2018, an increase of almost 600,000 bpd from 2015.

However, the view is not unanimous with the International Energy Agency (IEA) forecasting Russia's output to fall by 160,000 bpd over the same period.

Concurrently, analysts from Morgan Stanley while predicting a drop in non-Opec production, predicted the "decline would be uneven, both across time and across countries".

"Oil markets appear weak until mid-2017 but should tighten rapidly thereafter," they wrote in a note to clients.

Away from the oil market, a stronger dollar clobbered the precious metals sphere with gold leading the slide. At 1.47pm BST, Comex gold futures contract for December delivery was down 0.51% or $6.80 to $1,316.60 an ounce.

Kit Juckes, head of forex at Societe Generale, said Commodity Futures Trading Commission (CFTC) positioning shows US dollar longs, i.e bets that the dollar would extend gains, rebuilding slowly, as they have been since early May. "That's mirrored in the dollar's trade weighted gains, which can probably continue ahead of the US Federal Reserve and the BOJ [Bank of Japan] meetings this week.

"The slow build-up of dollar longs in the CFTC data is reflected in yen longs being cut back and euro and sterling shorts growing. With so many monetary policy meetings due, the boarder forex market mood is likely to be edgy."

That edginess is likely to be reflected in the direction of precious metals as well. Elsewhere, Comex silver was 0.86% or 17 cents lower at $19.52 an ounce, while spot platinum was also lower, by 0.94% or $10.10 to $1,071.90 an ounce.