Crude oil prices steadied on Tuesday, after posting one of their biggest selloffs this year the previous session over Greece's rejection of debt bailout terms and China's stock market woes.

Front-month US crude futures were trading at $52.97 per barrel at 0332 GMT, up 44 cents from the settlement on Monday, when an almost 8 per cent drop pulled the contract down to levels last seen in April.

Brent crude was up 63 cents at $57.17 a barrel, following a more than 6 per cent drop in the previous session.

"Crude oil prices hit a two-month low amid mounting concerns over economic stability in Europe and Asia. On the supply side, an increase in Iranian supply is expected to compete with Russian sales when the new supply hits the market," ANZ bank said on Tuesday.

Major global powers and Iran are negotiating a nuclear compromise that could end sanctions against Tehran and open up oil exports into an already oversupplied market, although diplomatic sources told Reuters on Monday that important issues remain unresolved.

"Prices (for Brent) are effectively capped below $70 per barrel in the near term. Structurally, the market is about 1 million barrels per day oversupplied through end 2016," consultancy FGE energy said.

Traders said expectations of Iranian exports resuming on a larger scale by 2016 had pulled down forward oil prices more than those closer to the present.

Since June 1, forward prices for Brent January 2017 delivery have fallen by $6.5 per barrel to around $63.40.

US prices have also been hit as more global supplies and cheap Brent could put pressure on US shale producers.

US prices for delivery in December 2016 fell to a new 2015 low of under $58 per barrel this week.

The outlook for oil demand also looks grim especially at key consumer China, where a 30 per cent slump in stock markets since June prompted the government to resort to an unprecedented series of support measures over the weekend to stabilise shares.

While Chinese Premier Li Keqiang said the country had the confidence and ability to deal with the risks and challenges faced by its economy, traders remained edgy given there was no mention of the market chaos in the statement.

Yet not all analysts are bearish in their oil price outlook.

US PIRA Energy Group said in a note published on Tuesday that "the worst of oil market imbalance is over with inventory overhang being much less than generally expected" and that "longer-term supply/demand fundamentals are bullish".- Reuters