Oil prices have dropped following a fall in the Chinese stock market, with Shanghai composite index down by 2.5%.

Brent crude for October fell by 60 cents at $49.01 a barrel, while the US crude, also known as West Texas Intermediate (WTI), dropped by 45 cents at $45.60, Reuters reported.

Following a four-day market holiday, investors in China sold shares resulting in the closure of main indexes in the country.

"Prices should be moving downwards this week, as prices would hardly find support."

At this time, the country announced further restrictions on futures trading.

Due to the global oversupply, oil prices have fallen by almost 60% since June 2014 and have been under further pressure in recent weeks after concerns about a weakening Chinese economy caused turmoil in stock markets worldwide.

In the week up to 28 August, an increase in the US crude stocks of 4.7 million barrels added to concerns of an oil oversupply despite a fall in the number of US oil rigs by 13 to 662 last week, Baker Hughes data revealed.

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By GlobalData

A stronger dollar also led to a drop in oil prices as the commodity became more expensive for other currency holders.

Phillip Futures oil analyst Daniel Ang told the news agency: "Prices should be moving downwards this week, as prices would hardly find support. Prices could move towards $43.53 and $46.81 for WTI and Brent."

The UK’s Oil and Gas Authority said that North Sea oil and gas sector has seen a loss of more than 5,000 jobs since late-2014, primarily due to the fall in prices.