Crude oil prices extended the drop last week in volatile trading, as the U.S. dollar extended its gains to reach the highest level in seven weeks on mounting fears the European debt crisis is worsening, after Germany witnessed one of its worst Bund auctions since the inception of the Euro, while yields on Italian bonds rose last week above 7%, a level that forced Greece, Ireland, and Portugal to seek bailouts, and yields on Spanish bonds also rose last week, which raised fears that the debt crisis is spreading into major economies within the euro zone area.
Meanwhile, economic data from the United States generally showed worse than expected performance, where GDP fell below projections, as the U.S. economy expanded in the third quarter by 2.0%, down from 2.5% in the prior estimate, while the income report showed that spending levels expanded at a moderate pace ahead of the holiday season, which raised concerns over the outlook of the world’s largest economy.
Europe will be very much the focus next week, where traders will be eyeing new developments on the European debt crisis, where Italy and Spain, the third and fourth largest economies in the euro zone area, are facing mounting pressures from the debt crisis, and the uncertainty that is surrounding the outlook continues to weigh down on confidence.
Traders will be eyeing the EU Finance Ministers meeting next week, where they will discuss the recent developments regarding Greece, and most likely Italy, and the European Financial Stability Facility fund. Moreover, traders will be eyeing bond auctions in Italy, France, Belgium, and Spain. Accordingly we should expect high levels of fluctuations in markets.
Important data will be released from Europe and the United States next week, where the ISM manufacturing index is due next week. Nonetheless, the main focus will be the employment data, as investors will be first eyeing the ADP employment report on Wednesday and after that their attention will shift to the U.S. jobs report, which is due on Friday.
Our overall outlook for crude oil prices is bearish, as the outlook for global growth is worsening due to mounting concerns from Europe and the fact that major economies around the globe are still weak, and that should put negative pressure on crude oil prices. Traders will be awaiting the infamous jobs report from the United States on Friday, and a strong figure could boost optimism and push crude oil prices higher.
Highlights for this week that will probably affect Crude Oil direction are:
Monday November 28:
The United States will join the session at 13:00 GMT with the new home sales figures for October, with expectations that the number on new homes sales could retreat to 310 thousands from the previous 313 thousands, while the monthly new home sales index could have dropped by 1.0% from 2.3%.
Tuesday November 29:
The United States will join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.
At 15:00 GMT the United States will announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.
Wednesday November 30:
The United States will join the session at 13:15 GMT with the ADP employment change for November, which is expected to show that the U.S. private sector could have added 130 thousands new jobs compared with the previous addition of 110 thousands in October.
At 13:30 GMT the United States will provide the nonfarm productivity and the unit cost labor indexes for the third quarter in a final reading, where the nonfarm product activity index is expected to expand by 2.6% from 3.1%, while the unit labor costs index could have dropped by 2.1% from the previous drop of 2.4%.
At 14:45 GMT the United States will also release the Chicago purchasing manager indicator for November, with expectations the indicator could have slightly improved to 58.5 from 58.4.
At 15:00 GMT the United States will end the session with the pending home sales indexes for October, where the monthly index could have expanded 1.2% from the previous drop of 4.6%, while the annual index previous reading was 7.9%
At 15:30 GMT, the EIA report for crude oil inventories will be released for the week ending November 25, where last week crude oil inventories decreased by 6.2 million barrels.
Thursday December 1:
The United States will join the session at 13:30 GMT with the initial jobless claims figure (November 26), where the number of claims could have retreated to 390 thousands from 393 thousands.
At 15:00 GMT the United States will provide the construction spending monthly index for October, which could have expanded by 0.4% from 0.2%.
The ISM manufacturing for November could improved to 51.5 from 50.8, while the ISM prices paid indicator could have expanded to 45.0 from 41.0.
Friday December 2:
The United States will join the session at 13:30 GMT with the closely watched jobs report for November, where the public sector could have added 120 thousand jobs to the economy compared with the previous addition of 80 thousand jobs in October, while the unemployment rate is expected to linger at 9.0%.
Originally posted here
