WTI struggles below $87.50 as Democrats seek end to Iran war after midterm sweep

• WTI attracts some sellers for the second straight day amid hopes of an end to the Iran war.

• The US-Iran standoff over the Strait of Hormuz keeps the geopolitical risk premium in play.

• The prevailing USD selling bias could further support oil prices, warranting caution for bears.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – remains depressed for the second straight day on Thursday, trading just below mid-$87.00s during the Asian session and close to a near one-month low touched the previous day.

Democratic leaders vowed Wednesday to push for an end to the Iran war after sweeping US midterm election victories to gain control of both Chambers of Congress. Top Senate Democrat Chuck Schumer suggested that his party could use the control over government funding to press for that goal, prompting traders to price out the geopolitical risk premium and weighing on crude oil prices.

Meanwhile, the Strait of Hormuz remains a key concern for energy markets as disruptions to shipping could constrain global supplies. In fact, Iran said that the US response to its conditions for reopening the strategic waterway was unsatisfactory. Furthermore, another oil tanker was struck off the coast of Oman near the Strait of Hormuz, adding to concerns about the security of shipments in the region.

Furthermore, the prevailing selling bias surrounding the US Dollar (USD) could act as a tailwind for the USD-denominated commodity. Hence, it will be prudent to wait for strong follow-through selling before confirming that crude oil prices have topped out and positioning for an extension of the recent sharp retracement slide from the 104.00 mark, or the highest level since May, touched last Friday.

WTI daily chart

Technical Analysis

Crude Oil prices retain a constructive tone while above the 100-day Simple Moving Average (SMA) at $86.11 and the 50.0% Fibonacci retracement of the latest upswing at $85.59. The confluence support points to the underlying dip demand after the recent pullback from multi-month highs.

A break below this, however, would expose deeper supports at the 61.8% retracement at $81.27 and the 78.6% level at $75.12, with the prior swing low region at $67.29 acting as a more distant floor. On the topside, initial resistance is lined up at the 38.2% Fibo. retracement at $89.91, followed by the 23.6% level at $95.25 and then the recent cycle high region at $103.89.

(The technical analysis of this story was written with the help of an AI tool. Know more.)