* U.S. rig count rises for first time since December 2014
* China watchdog probes mkt after over stock slump since June
* Iron ore, steel markets also hit by oversupply, Chinese probe
By Henning Gloystein
SINGAPORE, July 3 (Reuters) - Oil prices dropped on Friday on ongoing concerns of oversupply and after Chinese regulators opened an investigation into suspected stock market manipulation that also dragged on other commodities.
Front-month U.S. crude futures CLc1 were trading at $56.54 per barrel at 0038 GMT, down 39 cents from their last settlement.
That means that U.S. crude has fallen below a price range of $57-62 per barrel that it had been in since early May.
Brent crude futures LCOc1 were down 23 cents at $61.84 per barrel, keeping the contract in a downward trend that has been in place since early May and which has seen prices fall almost 10 percent.
"Negative sentiment stemmed from an increased U.S. oil rig count (by 12 to 640), after dropping for six months. U.S. shale producers have brought down the breakeven cost from $35 to $20 per barrel," ANZ bank said on Friday.
The rising U.S. rig count adds to near record production by OPEC and Russia. ID:nL3N0ZI1QL
Traders said that Asia's commodity markets were also impacted by reports that China's regulators had opened an investigation into suspected market manipulation after a slump of more than 20 percent in Chinese stocks since mid-June ID:nL3N0ZI5UL
On Thursday, Shanghai's benchmark composite index .SSEC fell below 4,000 points for the first time since April - a key support level that analysts had expected Beijing to defend. They had predicted that more conservative investors would start closing out leveraged positions if the index fell below 4,000.
The weak stock markets also pulled down other commodities.
Iron ore futures into China .IO62-CNI=SI have dropped almost 15 percent since mid-June and at $55.80 a tonne are not far above their historic lows of under $47 from last April, while Chinese steel prices SRBcv1 hit at least six-year lows of just over 2,100 yuan this week.
Beyond China's investigation, analysts said that iron ore, like oil, was suffering from oversupply.
(Editing by Joseph Radford)