Why is WTI holding losses near $95.00 after US midterm elections?

• Could geopolitical tensions and US election shifts lift WTI?
• Potential policy changes following the Democrats’ capture of Congress remain in focus for traders, alongside US-Iran tensions.
• Profit-booking follows recent price rallies as traders weigh mixed signals from the US on military action.

West Texas Intermediate (WTI) is giving up ground after the previous day’s modest advance, with prices hovering near $95.00 per barrel in Wednesday’s European session. However, caution ahead of Washington’s decision on the US-Israeli war on Iran may lend support to crude oil prices. The change in sentiment follows the Democrats’ seizure of control of Congress from President Donald Trump’s Republicans in the midterm elections. As counting continued in the US midterms, Democrats secured majorities in both chambers of Congress for the remainder of Trump’s second term.

Reuters quoted Priyanka Sachdeva, head of market insights at Phillip Nova, as saying that "President Trump's conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction". In her assessment, "some profit-taking and reduction in speculative long positions are justified, particularly after the sharp rally in October".

The regional situation remains shaped by military operations as well as diplomatic initiatives. According to Qatar’s Foreign Ministry spokesperson, both countries are assessing fresh proposals from mediators aimed at narrowing their differences. Iran’s national security chief, however, said in a social media post that Washington’s response was still unsatisfactory.

Earlier this week, defensive strikes by the US targeted Iranian surface-to-air missile systems that had been used against American assets. The narrow scope of the action nevertheless suggests that a return to large-scale military operations is not imminent.

Why are Nasdaq and USD recovering as Trump signals readiness to work with Democrats?

The initial weakness in US assets after the election has begun to reverse. Rabobank analysts point out that “on the back of the Democrat sweep in Congress in the US mid-term election both Nasdaq futures and the USD predictably softened.” They add that “perhaps the bigger surprise is that both have already started to reverse their early losses,” directly attributing the recovery to “comments that President Trump is looking to work with Democrats in Congress.” The swift change in sentiment underlines the speed at which shifting political signals can trigger a repricing of US assets.