Crude oil prices extended the gains on Monday, as a weak U.S. dollar and mounting tensions between Iran and the West overshadowed the fears that continued to dominate global financial markets over the outlook of the European debt crisis after rating agency Standard & Poor’s announced it could downgrade the credit rating of 15 euro zone countries including Germany and France. Standard & Poor’s also signaled it could downgrade the credit rating of the European Financial Stability Facility EFSF.
The situation in Iran could still provide more support to crude oil prices, where the prospects of a ban on Iranian crude oil imports to Europe provided crude oil prices with bullish momentum, although skepticism is starting to grow among European countries over the benefits of sanctions on Iran and the possible negative implications it could have on European economies.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where the focus will turn to the EU summit, as European leaders continue their efforts to find a resolution to the debt crisis.
Traders will be also eyeing the EIA report for crude oil stockpiles, where crude oil inventories are expected to decrease by 1.3 million barrels.
Our overall outlook for crude oil prices has changed somewhat to the upside, where rising tensions between Iran and the West could provide crude oil prices with bullish momentum, while optimism over the outlook of the European debt crisis could also support crude oil prices. Nonetheless, the prospects of slowing global growth could put negative pressure on crude oil prices, but the bias has changed to the upside.
Wednesday December 7:
At 15:30 GMT, the EIA report for crude oil inventories will be released for the week ending December 02, as the report is expected to show inventories fell by 1.3 million barrels, compared with the prior increase by 3.9 million barrels.
Originally posted here
