Crude Oil Forecast Dec. 15, 2011, Fundamental Analysis

, as the Organization of Petroleum Exporting Energy (OPEC) decided to lift up its production ceiling, thus, crude oil prices dropped to trade around its lowest level this month as the outlook for the euro area remains the weakest among its major rivals. There were no breakthroughs on Wednesday to alter the sentiment and investors were spooked after an Italian auction again ended with a new historic borrowing record as the debt crisis inflates.

Italy sold 3.0 billion euros of five-year bonds at an average new record yield of 6.47% up from the previous auction at 6.29%. The pressure of rising yields keeps the alarm ticking on the debt crisis and the materialization of the agony in Italy that investors are just betting it’s a matter of time that it will fall as well.

Merkel urged patience and believed that Europe will emerge stronger than it is after the crisis that takes hard work yet that did not unwind the pessimism in the market especially following a report about the German Chancellor Angela Merkel expressed her rejection for boosting the European Stability mechanism, according to a report out from Reuters yesterday.

The EIA report showed crude oil inventories fell by 1.9 million barrels, opposite to expectations of a decrease by 2.5 million barrels.

The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, where traders will also continue to monitor the developments from the 17-bloc euro nation and the European leader’ latest moves to contain the debt crisis, where we expect volatility to persist through the sessions this week.

Thursday December 15:

The United States will join the session at 13:30 GMT with the producer price index for November, where the monthly PPI index is expected to expand by 0.2% from the previous drop of 0.3%, while the PPI excluding food and energy monthly index could have expanded by 0.2% from the previous steady reading, in the time the annual PPI index could have remained unchanged at 5.9%, and finally the annual PPI excluding food and energy could have lingered at 2.8%.

The United States will also release the Empire manufacturing index for December, which could have improved to 2.50 from 0.61.

Furthermore, the United States will also provide the initial jobless claims figure (DEC 10), which could have inclined to 390 thousand claims from 381 thousands.

At 14:00 GMT the United States will return with the TIC flows for October, after the net long-term TIC flows was registered at $68.6 billion, while the total net TIC flows prior reading was at 57.4 billion.

At 14:15 GMT the United States will release the Industrial production index for November, where the industrial production index could have expanded by 0.2% from 0.7%, while the capacity utilization index could improve to 77.9% from 77.8%.

At 15:00 GMT the United States will provide markets with the manufacturing index of Philadelphia Federal District, which could have improved to 5.0 from 3.6.