As noted, with the markets in a choppy/consolidation mode (or perhaps worse), the integrated oil sector has appeal as a defensive strategy. An oil company worth a review: Chevron Corp. (NYSE: CVX).

Chevron's organic reserve replacement, excluding Canadian oil sands, is sub-par, but just about every other dimension of CVX's operation rates good-to-strong. The most compelling fundamental: 20 fuel refineries, to go along with an asphalt plant, for a total refining capacity of 2.21 million barrels per day. Almost half of that fuel refining is based in the United States. The significance? As noted, gasoline consumption continues to rise - despite near-record prices - while refining capacity is not, and that bodes very well for gasoline refiners, and Chevron is well-positioned in this vital commodity business.

The risks? The usual qualifications apply here -- including a U.S. recession, breakthrough alternative fuel, or a seismic public policy action -- but don't look for any of those to appear soon.

It has been yet another strong day for oil today, continuing yesterday's impressive gains. Yesterday oil was able to move up $1.44 a barrel and today traders have pushed the precious crude up another $0.46 to lift prices up to $68.11.

Today's move really shouldn't be much of a surprise to our readers, as we discussed yesterday, there is a perfect storm taking place right now for rising oil prices. We have several factors that are all pointing to even higher prices in the days to come.

Let's highlight the key points that are creating the current bullish oil market:

1. Violence between the Palestinian Authority's Fatah party and Hamas
2. Tensions between Iran and the West regarding its nuclear ambitions
3. Weak American refinery capacities

Those are the big three factors right now that are weighing on trader's minds. I will not rehash the details of each of the above three scenarios, but you can get my take on all of the above in my post yesterday on this topic. Basically, what we are looking at is the perfect environment to see prices continue to rise.

How much higher do I think we are going to see oil prices move? I have never claimed to see the future so I would hate to put a target on where I see things progressing, but I think it is highly likely that we are going to watch prices slowly move up to the mid $70's by the end of this month and would not be at all surprised to see $80 oil once again this summer. Also bear in mind that today we will see the front running futures expire and next week the August futures will take their place. This will create an artificial jump in prices of probably around a dollar, perhaps even more depending on what we see happening over the weekend.