Market Report: Oil Still Locked in a Range

We can talk about upcoming data from China or relief that the Greece crisis seems resolved for the moment, but the truth is oil is still locked in a range. This is a market where the bullish and bearish forces have been in a stale mate and a quagmire of epic proportions. For every bullish argument there is a bearish argument to counter it as crude oil waits to find a definitive direction.

Overnight oil seemed to be getting some support from geopolitical events as well as what some say is the expectations of strong economic data coming out of the US and China. A terror attack on a Moscow subway and a story about a Saudi ship firing on a ship from the United Arab Emirates are just as astonishing as the report on Friday that a North Korean Snipe supposedly sunk a South Korean ship that was later denied. Strong demand hopes have been tempered by rising yield in the long end of the treasury markets raising fears that interest rates will have to go higher. Oil has a lot on its plate and is keeping the market in lockdown.

OPEC put off its next meeting until October but at least one OPEC member seems to be optimistic about the future. Dow Jones reported that Shokri Ghanem, chairman of Libya's National Oil Co said that OPEC would raise production in October if the world economy picks up. Ghanem says that, "If the economy improves, demand picks up and prices go up; that will add pressure on the economy and OPEC will take action. In October the situation will be examined and action will be taken accordingly. Ghanem told Dow Jones that, "Change of OPEC production level is a more complex process--it follows the market but it looks at supply and demand, and whether the market is being driven by fundamentals, geopolitics or psychological factors as well as the plans for production from other member countries," he said.

Bloomberg News Margot Habiby reports that oil producers and consumers, trying to avoid a repeat of the $115-a-barrel price swing in 2008, will seek a "broad agreement" on improving market transparency and curbing volatility, according to the International Energy Forum. Habiby says that, "The IEF wants greater sharing of information on supply, demand, production and futures-market trading, and greater cooperation on forecasting by groups such as OPEC, the IEF and the International Energy Agency," he said ahead of the IEF meeting in Cancun. A must read on Bloomberg.