Oil prices have increased following a surge in Chinese stock prices and possible resolution of Greeck debt crisis.

Brent crude oil increased 51 cents at $59.12 a barrel, while front-month crude futures in the US were trading around 33 cents higher at $53.11 per barrel, Reuters reported.

According to the International Energy Agency (IEA), the oil prices will be under strain with softening of global demand, as well as increasing oil glut in the market.

At present, the global demand growth is 1.4 million and it is expected to slow in 2016 to 1.2 million barrels a day (Mb/d), the energy agency said.

"Global oil supply surged by 550,000 barrels per day in June, on higher output from both OPEC and non-OPEC producers."

IEA said in its report: "World oil demand growth appears to have peaked in the first quarter at 1.8Mb/d and will continue to ease throughout the rest of 2015 and into 2016 as temporary support fades.

"Global oil supply surged by 550,000 barrels per day in June, on higher output from both OPEC and non-OPEC producers. At 96.6Mb/d, world oil production was an impressive 3.1Mb/d higher than a year earlier, with OPEC crude and natural gas liquids accounting for 60% of the gain."

Deutsche Bank said in a note to the news agency: "Physical oil market fundamentals remain weak and, in the absence of OPEC production cuts or material supply disruption, this is unlikely to change meaningfully."

Oil prices got support as China’s CSI300 stock index closed more than 5% higher, it extended gains from the previous trading session following various government interventions that are aimed at halting a 30% fall in share prices since June.

Auto sales in China declined for the third straight month, falling 2.3% last month from a year earlier.

Prices also got support from development in Greece as the country has offered a cash-for-reforms proposal in front of Eurozone creditors, raising possibility for a breakthrough in the crisis.