By FX Empire.com
Crude oil prices rose last week in volatile trading, where the huge wave of optimism that spread across global markets after EU leaders agreed on plans to support Greece and ease the European debt crisis overshadowed the bigger than expected rise in crude oil inventories as shown by the EIA report, although the EIA report led crude oil prices to fluctuate before closing the week at highest level since early August.
The EIA report for crude oil inventories showed that crude oil stockpiles increased for the week ending October 21, increased by 4.7 million barrels, higher than median estimates for an increase of 1.4 million barrels, and the prior drop of 4.7 million barrels, which put crude oil prices under pressure on Wednesday.
The highly anticipated EU summit revealed the plans to ease the euro zone debt crisis, which included pledging more support to Greece in addition to agreeing 50% in writedowns to Greek debt, increasing the size of the European Financial Stability Facility EFSF to 1 trillion through leveraging of 4 to 5 times.
The EU deal was highly welcomed by participants around global markets, while data from the United States provided mixed results, where on one hand the Gross Domestic Product advanced estimate for the third quarter showed the U.S. economy expanded by 2.5%, following the prior expansion of 1.3% in the second quarter, while the income report showed personal income remained weak in September, while personal spending improved in line with projections, and the Fed’s favorite gauge for inflation, Core PCE showed inflationary pressures eased in September.
Meanwhile, important fundamentals will be released from all around the globe next week, where the focus next week will turn to Europe’s inflation rates, in addition to the European Central Bank’s rate decision, where the ECB is expected to leave the benchmark interest rates unchanged at 1.50%.
As for the United States, the week is full of important economic fundamentals, where the FOMC rate decision is expected to dominate the highlights early in next week, where some analysts argue that the Fed could embark on another round of quantitative easing, although majority in markets believe the Fed will keep the current monetary policy unchanged. Traders will be also eyeing the Fed’s Chairman Ben Bernanke, as he will deliver the Fed’s latest projections on economic growth, unemployment, and inflation.
Our overall outlook for crude oil prices has changed to the upside, yet the data that will be released from the United States could play a major role in shifting the outlook, where if the data comes out better than expectations, crude oil prices are likely to extend their rise towards $100 a barrel. Moreover, traders will be eyeing key rate decisions from the Federal Reserve Bank and the European Central Bank.
Highlights for this week that will probably affect Crude Oil direction are:
Monday October 31:
The United States will join the session with the Chicago purchasing manager at 13.45 GMT, with expectations that the indicator could have retreated to 59.0 from 60.4 in October.
Tuesday November 01:
The United States will start the day at 14:00 GMT with the construction spending figures for September, with expectations that the index will expand by 0.3% from the previous 1.4% expansion.
The ISM manufacturing will also be released at 14:00 GMT, where the indicator is expected to show improvement to 52.3 from 51.6 in October.
Wednesday November 02:
The United States will join the session at 12:15 GMT with the ADP employment change for October, as employment is expected to increase by 101 thousand jobs from 91 thousand.
At 14:30 GMT, the EIA report for crude oil inventories will be released for the week ending October 28, where last week crude oil inventories increased by 4.7 million barrels.
At 16:30 GMT the United States will release the FOMC rate decision, with expectations for a steady rate of 0.25%.
At 18:15 GMT, the Fed’s Chairman Ben Bernanke will speak at a Fed Conference to discuss the latest projections and outlook for the U.S. economy.
Thursday November 03:
The United States will start the day at 12:30 GMT with the nonfarm productivity for the third quarter in a preliminary reading, which is expected to expand by 2.5% from the prior drop of 0.7%. In addition, the unit labor costs for the same period is expected to drop by 0.4% from the previous expansion of 3.3%.
The United States will also provide markets with the initial jobless claims (October 28), which was 402 thousand in last week.
At 12:45 GMT the European Central Bank will announce interest rates, which is expected unchanged at 1.50%.
At 14:00 GMT the United States will release the ISM non-manufacturing composite for October, which could have improved to 54.0 from 53.0.
Moreover, the United States will release the factory orders index for September, with expectations for 0.1% further drop from the previous 0.2%.
Friday November 04:
Canada will release the jobs report for October at 11:00 GMT, where the unemployment rate is expected to remain unchanged at 7.1% in line with the prior estimate, and the net change in employment is expected to increase by 20.0K jobs in October, compared with the prior rise of 60.9K jobs in September.
Canada will release the building permits for September at 12:30 GMT, where building permits fell by 10.4% in August.
At 12:30 GMT theUnited Stateswill join the session with the monthly jobs report for October, where the change in nonfarm payrolls is expected at 100 thousand new jobs from 103 thousands in September. In addition, the unemployment rate is expected unchanged at 9.1%.
Canada will release the Ivey PMI for the month of October at 14:00 GMT, where the Ivey PMI is expected to ease to 54.5 from the prior estimate of 55.7 back in September.
See what are the upcoming financial event on the FX Empire Economic Calendar now.
