WTI stays above $82.00 ahead of EIA inventories

• WTI remains firmer around seven-year top refreshed on Monday, picking up bids of late.
• API inventories couldn’t derail upside momentum amid risk-on mood, softer USD.
• China woes, EIA stockpiles data will be eyed for fresh impulse.

WTI holds onto the recent gains near $82.40, up 0.05% intraday, during a quiet Asian session on Wednesday. The oil benchmark cheered the US dollar weakness and upbeat sentiment to ward off the bearish inventory levels published by industry sources the previous day. The latest moves, however, await the official stockpile data for further direction.

Global market sentiment improved on Tuesday after the downbeat US housing number questioned the Fed’s tapering plans. Also positive for the risk appetite were receding fears of the coronavirus in the Asia-Pacific region.

However, downside risks to the Asian economic growth, as cited by the International Monetary Fund (IMF), challenged the bulls. On the same line were comments from Fed Governor Christopher Waller. “If inflation keeps rising at its current pace in coming months rather than subsiding as expected, Federal Reserve policymakers may need to adopt ‘a more aggressive policy response’ next year,” said the Fed policymaker per Reuters.

Amid these plays, the US Dollar Index (DXY) dropped to a three-week low before consolidating losses around 93.77 at the latest while the Wall Street benchmarks to poke record tops. Further, the US 10-year Treasury yields gained 5.7 basis points (bps) to rise to the highest levels since late May by the end of Tuesday’s North American session.

Elsewhere, the American Petroleum Institute (API) Weekly Crude Oil Stock rose past 2.233M forecast to 3.294M for the period ended on October 15. It’s worth noting that the previous readout was 5.213M.

Above all, fears of oil stock outage and improvements in demand, due to the global transition from the pandemic-led activity restrictions, may help the black gold to refresh multi-month tops.

Moving on, the official weekly oil inventory data from the Energy Information Administration (EIA), expected 2.233M versus 6.088M prior, will direct short-term oil prices. Also important are the risk catalysts including China's growth fears, Fed tapering concerns and geopolitical woes.

Technical analysis

Although late 2012 lows near $84.10 challenge the WTI bulls, the commodity sellers are less likely to take the risk until the quote stays above July’s high of $76.40.