By CommoditiesMansion.com – Crude oil prices dropped last week, as pessimism dominated markets amid the huge uncertainty that continued to surround markets, where slowing economic activities in the United States sparked concerns the world’s largest economy is on its way to a double dip recession, while mounting fears from the European debt crisis, as European banks seem to be having a liquidity crisis, which boosted demand for lower yielding assets, and accordingly putting crude oil prices under pressure and pushed prices to the downside.
Data from the United States showed manufacturing activities contracted in August, while the housing market continued to struggle to recovery, as existing home sales dropped in July, while jobless claims rose above expectations, which sparked concerns over the outlook of the U.S. labor market.
Meanwhile, the EIA report showed that crude oil inventories increased by 4.2 million barrels above median estimates, which pushed crude oil prices to the downside.
Rising pessimism in global financial markets should put crude oil prices under more pressure over the coming period, where traders are concerned the U.S. economy is heading into a double dip recession, and since the United States is the world’s largest consumer of oil, demand for oil will fall, and that continues to weigh down on prices, while concerns from the European debt crisis will also contribute to the anticipated bearish trend over the coming period.
Highlights for this week that will probably affect the Crude Oil direction are:
Monday August 22:
No major data is queued for release from the United States on Monday, as the start of the week will be focused on the prevailing downbeat sentiment and fear of the worsening outlook.
Tuesday August 23:
Germany will start at 07:30 with the flash Manufacturing PMI for August, which is expected to slow to 51.0 from 52.0 while the PMI Services is also expected weaker at 52.0 from 52.9.
The euro area starts the fundamentals this week with the flash estimate for the August PMI at 08:00 GMT. The Manufacturing PMI is expected to contract in August at 49.5 from 50.4 while the services PMI is expected to slow to 51.0 from 51.6 and the Composite PMI is expected flat at 50 from 51.1.
The United States will start the data at 14:00 GMT with the New Home Sales for July which are expected with 1.0% rebound to 315 thousand from 312 thousand.
Wednesday August 24:
The euro area will report the Industrial New Orders for June at 09:00 GMT which is expected flat down from the previous month’s rally of 3.6%.
The Durable Goods Orders are due from the United States at 12:30 GMT for July and expected with 2.0% rebound following 2.1% slump while excluding transportation expected with 0.6% drop following 0.1% rise.
At 14:30 GMT, the EIA report for crude oil inventories will be released for the week ending August 19, where last week crude oil inventories increased by 4.2 million barrels.
Thursday August 25:
The weekly jobless claims are due from the U.S. as usual at 12:30 GMT after last week they unexpectedly rose to 408 thousand.
Friday August 26:
The week will end with the infamous GDP from the U.S. at 12:30 GMT. The preliminary reading for the second quarter is expected downbeat on the market with the projected downside revision to 1.1% from 1.3%. Personal consumption expected with upside revision to 0.2% from 0.1% while the Core PCE expected steady at 2.1%.
The week will end with the University of Michigan Confidence final reading for August at 13:55 GMT, which is expected with an upside revision to 56.0 from the advanced estimate of 54.9.
