Crude oil is trading within a very tight range but with a negative momentum due to mixed sentiment over the European debt crisis and the possibility of a Greek default, where top officials from the Euro area are trying to calm the markets down by reassuring their support for Greece and they will not let it to default.

President Nicolas Sarkozy and Chancellor Angela Merkel said, after a conference call between them and Papandreou, that they are “convinced” that Greece will remain a member of the euro area to dismiss speculation that the deep fiscal crisis will force Athens to drop the euro and get out from the Euro zone.

Also, the European Commission’s president, Jose Manuel Barroso, said that the commission will present options on euro area bonds, but he assured that these options will not bring direct solution for the debt crisis in the zone.

Oil for October delivery is currently trading around $88.61 a barrel after recording a high of $88.99 and a low of $87.99, where it opened the session at $88.55.

The thing that eased negative pressure on crude oil yesterday was the EIA report, which showed a huge drop in U.S. stockpile more than expected, as it showed a drop in U.S commercial crude oil inventories by 6.7 million barrels from the previous week to reach 346.4 million barrels, but the data that showed a zero growth in retail sales has anchored crude more and more.

The European commission statement and Merkel, Sarkozy comments have eased some fears that dominate the market over a Greek default and getting out of the Euro-zone and risk of contagion to other debt-laden nations such as Italy, Spain and Portugal, which is considered the worst effect from a Greek default.

Rating agencies are adding more pressures on markets, as we saw yesterday a downgrade for two of the France’s biggest banks due to their exposure to the Greek economy, as the French second biggest bank Credit Agricole was downgraded to Aa2 rating and Societe Generale SA as well to have a Aa3 rating.

The downgrade move by rating agencies has made investors much worried over the outlook for Europe and the big problem is not if Greece default; but what will happen to other European countries, especially the debt-laden nations which will fall after that like the domino stones.

Uncertainty may remain dominant in the market with pessimistic sentiment among investors, but comments from officials may relief the markets for a while, and oil could benefit from that relief and go up, but the major trend for it will be top the downside.