An oversupply in the US oil market due to the rising rig count, led to supply exceeding the demand for crude oil. Also, the suspected stock market manipulation in the Chinese market had a bearing on the oil prices, which dropped on Friday, driving down the growth rate.

These waning prices are majorly attributable to the rising US rig counts. Oil rigs increased by 12 to 640 following a slump that cut the number of active US rigs from a peak of 1,609 in October to a nearly five-year low last week. In fact, rising US rig count has resulted in record production by Russia and the Organization of the Petroleum Exporting Countries (OPEC), which is driving a huge oversupply.

The supply from these OPEC countries hit a three-year high in June due to massive production from Iraq and Saudi Arabia. Overall, the grouping's production rose to 2.5 million bpd above demand. This week, the US oil drilling increased after 29 consecutive weeks of declines, resulting in low prices.

This oversupply called the Brent crude for August LCOc1 go down $1.69 at $60.37 a barrel (13 percent). Front-month US crude CLc1 was at $55.51, down $1.40, dropping below a trading range of $57 to $62 seen since early May.

In fact, the flagging US trade could also be blamed on the many US market participants, off for the Independence Day holiday. In addition, 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, also had a negative effect on the market sentiment.