US OIL RIGS COUNT

US oil rigs count increased for the fourth consecutive week to 672 despite oil staying in the low US$40s. Oil could possibly trend below the psychological US$40 per barrel int he coming weeks due tot he following reasons:

1) No clear sign of the production in the US and OPEC countries abating significantly to support a higher oil price, OPEC production reached its highest at 31.4M barrels in July, eroding gains in oil price in anticipation of  the summer driving season.
2) A refinery outage in Indiana reignite the fear that storage in Cushing could quickly rise
3) August will mark the the final month of the summer driving season and in the following months could see storage in Cushing rise again as the refineries go in maintenance mode in autumn
4) Continued focus on Iran and how it will add on to the global glut of oil

However, I am of the opinion that price could recover towards the fourth quarter if Saudi Arabia decides to cut back on it production by 200,000 - 300,000 bopd as reported recently and the continued financial strain among US shale oil producers which could force some into bankruptcy or mergers.

The silver lining is of course, OPEC can't continue to maintain oil at the current price as it is also causing financial strain to the respective countries' budget. most OPEC countries require oil to be above US$100 per barrel to sustain their budgets.

I see oil hovering at US$50 - US$60 by year end, lower than my earlier projection of US$55 - US$65.