Good news may be in store at the pump before the July 4th weekend as oil prices dropped on Friday amid reports that an oversupply of the crude remains on U.S. oil rigs.

U.S. crude futures CLc1 traded at $56.72 per barrel down 21 cents from their last settlement while Brent crude futures LCOc1 were down just 3 cents at $62.04 per barrel. In total, U.S. crude has fallen to a price range of $57-62 per barrel since early May.

"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 increase in U.S. rig count augments the near record production by OPEC and Russia.

Chinese Stock Investigation

Adding to the situation is the current stock market rout in China which has erased trillions of dollars of market capitalization in Shanghai and Shenzhen's stock markets. Although excessive volatility in the Chinese markets has become commonplace, Chinese regulators have now opened an investigation into suspected stock market manipulation.

Zhang Xiaojun, spokesman for the China Securities Regulatory Commission, pointed to irregularities between securities and futures trading after a decline of more than 20 percent in Chinese stocks since the middle of June.

According to Xiaojun, "Cases that meet legal standards will be immediately investigated, seriously cracked down upon according to law, and those suspected of a crime will be resolutely transferred to the police for investigation."

Chinese stock markets had doubled in value between November and early June, before the runoff began on June 12.