WTI slumps below $86.50 as midterm elections fuel hope for an end to Iran war
- WTI price tumbles to near $86.40 in Thursday’s early European session.
- The Democrats won control of the House of Representatives and the Senate.
- Crude oil inventories fell by 865,000 barrels in the week ended October 30, EIA said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.40 during the early European trading hours on Thursday. WTI falls after President Donald Trump's Republican Party lost control of Congress in midterm elections.
The Democrats won a majority in both the US Senate and House of Representatives on Tuesday, taking control from Republicans. The election outcome raises prospects of political gridlock in the US and lowers expectations that Trump will resume military strikes against Iran.
Trump said on Tuesday that Washington had no immediate plans to strike Iran, and on Wednesday acknowledged that the Iran war had played a role in his party's sweeping defeat in the midterm elections. His comments exert some selling pressure on the WTI price.
"The Democratic control of Congress could also tighten US military spending in the Middle East and further heighten the possibility of a peace deal sooner rather than later," said Dennis Kissler, senior vice president of trading at US financial services firm BOK Financial.
US crude oil inventories declined by less than expected last week. According to the Energy Information Administration (EIA), crude stockpiles dropped by 865,000 barrels in the week ending October 30, compared to a fall of 1.892 million barrels in the previous week. The market consensus was for a decline of 900,000 barrels.
Brent outlook anchored by Middle East diplomacy narrative
According to TD Securities, a persistent “diplomacy headline drag remains” on crude, with “the expectation for a deal as opposed to escalation in the Middle East” still seen as “the main drag on crude oil prices,” a view that has been “further” reinforced by the US midterm election results. The bank argues that, beyond the “potential for a near-term overshoot,” crude is likely to “settl[e] into a higher-for-longer regime, with fair value for Brent crude oil remaining in the $90-100/bbl range,” and sees “potential for upside via risk premium so long as the Middle East and Russia-Ukraine conflicts remain unresolved.”
Technical Analysis: WTI remains above the 100-day SMA
In the daily chart, WTI US Oil holds just above the 100-day Simple Moving Average (SMA), but the overall structure is bearish as it remains well under the 20-day Bollinger middle band0, indicating a market capped by medium-term resistance overhead. The Relative Strength Index (14) near 35 points to weak momentum, hinting that selling pressure still dominates despite the proximity of trend support.
On the topside, initial resistance emerges at the lower Bollinger band around $87.60, with stronger barriers at the Bollinger middle band near $96.60 and the upper band around $105.60 if a rebound extends. On the downside, the 100-day SMA at $86.10 offers immediate trend support; a sustained break beneath this floor would likely open the way to deeper losses, in line with the subdued RSI profile.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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