The market can go higher, led by commodities stocks. Metals price should stay strong as most have low inventories and the trend is up for gold.

But given the low level of inventories, strong global demand and lack of a cushion, we believe the market still has and will continue to have an upside risk.

We have high crude prices. We have low inventories. We have strong demand. All of that would be a recipe for a taut market even with refineries (running at full capacity).

Gains in the market are fund-led. Trading in the region remains relatively strong with funds pursuing select stocks, among them metals. Overnight gains on Wall Street also helped sentiment.

Despite the surprise 1.3 million-barrel drop in DOE crude stocks for last week, inventories in the market remain near April 1999 highs.

The specter of progressively higher inventories is blunting the impact of geopolitical tensions, making it harder for the market to climb.