After last week's gains in oil, we had another strong day today to get the week started right where we left off on Friday. Oil traded up $1.04 today to close the session at $69.04 after setting a high earlier in the session at $69.15.

As I wrote on Friday, oil has been bullish lately due to a couple key factors; mainly low refinery production and international violence. Well, just when you thought that things couldn't get worse, they do. Today we get news of additional violence in Nigeria and yesterday we saw a 2 rocket attack on Israel which is now being blamed on a Palestinian group.

Let's remember that is was a war between Israel and Hezbollah last summer that helped push oil up to the $80 mark. Yesterday on the news it looked as though Hezbollah may have been the party that fired yesterday's missiles, an act which could easily have sent the two parties back into war. For now it looks like Hezbollah was not to blame, but it definitely brought back memories of last summer's bloody war.

Yesterday in Nigeria rebels attacked a flow station belonging to Eni SpA (NYSE: E) and took a dozen workers hostage during the raid. Things in Nigeria have been volatile for some time now, with the recent outbreak in violence coming after the April Presidential elections that left many citizens claiming a rigged outcome. Since that time the government has lifted prices on automobile fuel which has Nigerian oil unions now threatening a strike starting this Wednesday.

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.