NEW YORK (TheStreet) -- This oil market is acting far better than it should -- far, far better. And for a lifelong trader of oil like me, that's about all one needs to be convinced that it's headed higher.

Fundamentally, oil has no business being steady at $100 a barrel in the West Texas Intermediate futures contract and more than $110 a barrel for the European Brent futures contract.

Indeed, the outlook for growing demand has virtually ground to a halt everywhere but in China. Here in the U.S., we've cut demand by almost 2 million barrels a day in the last five years, and Europe is also experiencing a demand slowdown.

Even in China, oil imports increased only 6% in 2011, which represented a massive slowdown in growth compared to the 17% rise in 2010 and the 14% rise in 2009.

From a supply standpoint, increased development domestically in the Bakken and other oil-shale resources, as well as in the Gulf of Mexico, have kept our markets saturated. Globally, new sources are coming online in Brazil and Angola, and formally lost sources in Libya and Iraq are rapidly making their way back to market.

Much of the recent support in oil is being attributed to geopolitical conflict. Continuing Iranian nuclear aspirations have threatened to close the Strait of Hormuz, through which more than 25% of all global oil flows.

Although Iran is unlikely to follow through with this threat, there is continued U.S. pressure to increase economic sanctions on Iran and force a worldwide boycott of Iranian oil exports, a not insignificant total of 2.6 million barrels a day.

But last week brought some disappointments to that plan. The European Union decided to postpone a decision on an Iranian oil boycott for six months while struggling sister states Greece and Italy could secure alternative sources for Iranian oil.

Treasury Secretary Tim Geithner traveled to the Far East to elicit the support of both Japan and China for an Iranian boycott with less-than-stellar results.

The Japanese delivered some promises from refiners for finding new supply sources, while the Chinese promised little and saw Premier Wen Jiabao hop on a flight to Saudi Arabia immediately following Geithner's visit, presumably to use the American sanctions as a lever to negotiate more liberal import terms from OPEC members.

Still, with all of these fundamentals flagging and threats of an Iranian embargo waning, oil still has found incredible strength. Even the Saudis have increased their target price on global oil to $100 a barrel, up from a stated $70-$80 price target from 2008.

What do you do with a good, strong market in spite of sagging fundamentals? You buy it.

The deepest laggards in the energy sector have been in higher-beta oil exploration and production companies and in many of the oil services companies.

This is not entirely unusual as a similar divergence has been seen between oil and oil stocks before and often signals a terrific opportunity to buy an underperforming sector.

In this one case, it is easy as well as useful to use broad-swath energy exchange-traded fund, such as the Select Sector Energy SPDR ( XLE) and the Market Vectors Oil Services ( OIH) to gain exposure to many companies in both the energy and oil-services sectors.

That's because while the fundamentals are not entirely convincing, the oil market continues to show incredible strength. And for traders, the market tells us all we really need to know.

At the time of publication, Dicker had no positions in securities mentioned.

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