Crude oil prices extended the gains on Monday, as mounting tensions between Iran and the west continued to provide support for crude oil prices on concerns of supply disruptions from the world’s fifth largest oil exporter. Moreover, hopes that EU leaders could find a resolution to the debt crisis boosted optimism in markets and encouraged investors to target higher yielding assets including crude oil.
The situation in Iran could still provide more support to crude oil prices, especially if the United States and Israel decided to take military action, although for now that is an improbable scenario, but further unrest in the middle east region could provide more bullish momentum to crude oil prices.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where reports suggest that Germany and France reached an agreement on a plan to ease the European debt crisis. Nonetheless, tensions remain elevated in financial markets, as investors are concerned that EU leaders will fail to reach an agreement again after suffering similar disappointments over the past few months.
Our overall outlook for crude oil prices has changed somewhat to the upside, where rising tensions between Iran and the west could provide crude oil prices with bullish momentum, while optimism over the outlook of the European debt crisis could also support crude oil prices. Nonetheless, the prospects of slowing global growth could put negative pressure on crude oil prices, but the bias has changed to the upside.
Tuesday December 6:
The euro zone will start the session at 10:00 GMT with the GDP figures for the third quarter in a preliminary reading, where the quarterly and annual seasonally adjusted indexes could have lingered at 0.2% and 1.4% respectively.