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Why oil will drop to $35 by end of summer

The state of the oil market these days can be summed up in a four-letter word—no, not one of those salty terms, but a powerful, unoffending term: glut.

After peaking in early June, near $52, WTI oil prices have fallen upwards of twenty percent, getting under $41 per barrel, for a time, on Friday.

There were several supply issues that ranged from the Canadian wild fires to renewed unrest in the Niger Delta that combined to reduce global oil output, or so it seemed.

OPEC production has risen steadily, with Iran, Iraq and Saudi Arabia leading the way.

In fact, Iran claims to need only two more months to return to full pre-sanction production levels, having already reached 80 percent mark. Their aggressive marketing efforts are bearing fruit, as sales to their historical customers in Asia have risen nearly 50 percent in June, from year ago levels.

Saudi Arabia is back to pumping at near-record levels just above 10.5 million barrels per day.

The surge in Iranian sales to Asia is certain to irk the kingdom, and a renewed battle for market share, between the two, is not out of the question.

Making matters worse, it appears Libyan exports are set to resume, as a result of an uneasy agreement among warring government factions and the resolution of a last-minute glitch over pay for the guards at their key export terminals.

Despite the hand-wringing in the market over barrels of oil that could...