WTI bears attack $88.00 as concerns over China’s demand, US mid-term elections join API inventory build

• WTI reverses Friday’s jump during a three-day downtrend, remains pressured of late.
• China reported the biggest daily jump in covid cases in six months, teased more lockdown.
• Fears of challenges to US spending in case of Republican victory, surprise build in API inventories also favor the Oil bears.
• China inflation, EIA stockpiles will be important for intraday directions.

WTI bears keep the reins for the third consecutive day, despite recent inaction around $88.00, amid fears of less demand and higher inventories. However, the cautious mood ahead of the key China inflation data and weekly official inventory data from the US Energy Information Administration (EIA) test the commodity traders.

A six-month high of the fresh covid numbers from China bolstered the market’s fears of multiple lockdowns and a reduction in the energy demand from the world’s biggest industrial player on Tuesday. On the other hand, the latest polls suggesting hardships for the Democrats to keep control in both Houses also seem to challenge the oil bulls amid fears of less spending and demand for the black gold.

Recently exerting downside pressure on the energy benchmark is the weekly prints of the American Petroleum Institute’s (API) Crude Oil Stock data. That said, the weekly inventories for the period ended on November 04 rose to 5.618M versus -6.53M prior.

Elsewhere, comments from Oman's Energy Minister Salim al-Aufi also weighed on the WTI as he said, per Reuters, on Tuesday he saw oil prices coming down from the range of $90 a barrel after the winter season.

It should be noted that the black gold failed to cheer the broad US dollar weakness, as well as an upbeat performance of equities and bonds while portraying the bearish move of late.

Moving on, China’s Consumer Price Index (CPI) and the Producer Price Index (PPI) for October will act as the immediate catalyst for the WTI traders ahead of the weekly prints of EIA inventories, expected 1.1M versus -3.115M prior. Given the market’s recent shift in sentiment and likely hardships for the commodity traders, the Oil bears are expected to keep the reins.

Technical analysis

A clear pullback from the 100-DMA hurdle, around $90.70 at the latest, directs WTI bears towards a six-week-old support line, close to $86.40 by the press time.