Oil rig counts in the U.S. rose for the first time since December 2014 last week, weighing on the commodity's price and serving as a reminder of oversupply fears, which could impact year end price targets.
U.S. crude futures and Brent crude for August delivery both fell roughly 2.5 percent on Friday to trade around $55.60 and $60.40 respectively on Friday—despite a number of more bullish price forecasts in recent months.
This was after data from Baker Hughes showed the U.S. oil rig count rose by 12 to 640 in the last week, putting a stop to 29 consecutive weeks of decline. Since peaking at 1,609 rigs in October last year, the count has slumped around 60 percent.
Chief oil analyst at Energy Aspects, Amrita Sen, said that last week's number were "distorted" due to flooding and the closure of the Houston ship channel, one of the busiest waterways in the world, and pointed to the consistent falls seen this year.
However, oversupply fears also hit oil prices on Wednesday, after the U.S. Energy Information Administration reported that U.S. crude-oil stockpiles rose last week for the first time in nine weeks. And this followed data that showed a sharp ramp up in U.S. production in April to levels not seen in decades.
Last week, UBS became the latest firm to upgrade its outlook for the price for Brent crude oil to $61.59 per barrel from $56.25 on signs that non-Organization of the Petroleum Exporting Countries (OPEC) investment was slowing.
This is a smidgen above the consensus among market watchers for Brent at $60 per barrel the end of the year.
But a number of bullish forecasts from the likes of investment boutique Oppenheimer & Co. and billionaire oil tycoon Boone Pickens in recent months have boosted some expectations to $70 by the end of 2015.
However, Sen said: "I think to see a break to the upside; you need inventories to start falling and not just in the U.S., globally. That means production needs to start falling, or the Chinese need to start to buying, which is happening but needs to pick up speed."
She added that "Downside risks are plenty."
"In the macro space there is Greece, there is the Chinese stock market, ultimately inventories are still very high, unless that cleans up I think prices are going to be capped. I don't think prices should break significantly to the downside, but you know getting anywhere close to $70 is quite some time away."
In the short-term, worries surrounding the Greek referendum this Sunday could hit the price of oil, Sen said, as the U.S. dollar could strengthen, which is traditionally negative for oil prices.
"European demand is up about 400,000 barrels per day this year. Greece or no Greece, I think that continues, but on the oil price, through the dollar you can get some negative impact—but I hope that a lot of this is priced in already," she added.