Crude oil prices fell on Wednesday, where cautious trading continued to dominate markets ahead of the European Central Bank’s meeting on Thursday, where the ECB is widely expected to cut the benchmark interest rates by 25 basis points to 1.00%. Moreover, investors were careful ahead of the EU summit on Friday amid hopes EU leaders will announce strong measures to ease the euro zone debt crisis.
Moreover, the EIA report showed that crude oil stockpiles increased by 1.3 million barrels last week, compared with the prior increase of 3.9 million barrels, and above the median estimates of a drop by 1.3 million barrels, which put crude oil prices under negative pressure.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where the focus will turn to the ECB decision on interest rates and the conference that will follow the decision, as investors will be eyeing remarks by the ECB Chairman Mario Draghi and whether the ECB will loosen its monetary policy further in the future.
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. Accordingly, we expect crude oil prices to fluctuate heavily through the rest of this week.
Thursday December 8:
The European Central Bank will start the session with the Interest Rates Decision for December, with expectation the Governing Council could have lowered the key rate to 1.00% from 1.25%.
The United States will join the session at 13:30 GMT with the Initial Jobless Claims (DEC 2), noting that the previous figure was 402 thousand claims.
At 15:00 GMT the United States will provide markets with the Wholesale Inventories for October, which could have expanded by 0.4% from the prior drop of 0.1%.