Interestingly global equity markets have been able to hold onto the majority of their gains for 2012 so far in spite of the global turmoil. As shown in the EMI Global Equity Index table below the Index is higher by 13.3%. Hong Kong, Brazil and Germany are holding the top three spots in the Index. With inflation risk rising and economic growth looking more and more like it is slowing the global equity markets are becoming more and more susceptible to a modest round of profit taking selling.
This week's oil inventory reports will be released a day late because of the holiday in the US on Monday. The API data will be released on Wednesday afternoon while the EIA data will hit the media airwaves at 11:00 AM EST on Thursday. At the moment oil prices are still being mostly driven by the tensions evolving in the Middle East between Iran and the West (as discussed above) and to a much lesser extent based on the direction of the euro and the US dollar. As such I am not sure many market participants are going to pay much attention to this week's round of oil inventory data suggesting that this week's oil inventory reports may not have a major impact on price direction. At the moment all market participants are continuing to follow the new snippets out of the Middle East and the tick by tick direction of equities and the US dollar (driven by Europe)...as they are both the primary price drivers for oil. Even with the fundamentals and geopolitics starting to impact price, it is the macro trade that dominates at the moment. As such this week's oil inventory report could remain a secondary price driver at best and only impact price direction if the actual EIA data is noticeably outside of the range of market expectations for the report.