Crude Oil Weekly Forecast December 26-30, 2011, Fundamental Analysis

Crude oil prices inclined last week, as the EIA report showed crude oil inventories fell heavily last week by 10.6 million barrels opposite to expectations, which provided the oil prices with more upside momentum last week.

We started from last week to see the thin holiday volume with the choppy trading evident, where the eyes were on the ECB three year loans which flooded banks with 489 billion euros and the market still has a cautious reaction to it.

This week we are surly in the holiday mode and with thin volumes of trading any move might be violent and especially with the lack of major data.

Our overall outlook for crude oil prices is somewhat neutral with a downside tendency, 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. Nonetheless, if the outlook for global growth improves, crude oil prices are likely to rise in that case.

Highlights for this week that will probably affect Crude Oil direction are:

Monday December 26:

Markets closed for Christmas holiday.

Tuesday December 27:

The United States will release the Consumer Confidence for December at 15:00 GMT which is expected to rise to rise to 58.1 from 56.0.

Wednesday December 28:

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment. The eyes will be onItalythat will be preparing to auction new bonds.

Thursday December 29:

The U.S. will start with the weekly jobless claims for the week ending December 24 at 13:30 GMT after last week they dropped to 364,000.

The Chicago PMI for December is due at 14:45 GMT and expected to ease to 60.2 from 62.6. At 15:00 GMT we have the pending home sales for November which is expected to ease to 1.8% after the 10.4% surge.

At 16:00 GMT, the EIA report for crude oil inventories will be released for the week ending December 23, where last week crude oil inventories decreased by 10.6 million barrels.

Friday December 30:

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment.