WTI remains under pressure below $87.50 as Democrats push to end Iran war following midterm sweep

Selling pressure persists in WTI for a second consecutive day as hopes grow for an end to the Iran war.
A geopolitical risk premium remains in place as the US and Iran stay at odds over the Strait of Hormuz.
Oil bears have reason for caution, with continued US Dollar selling potentially lending further support to prices.

Selling pressure keeps West Texas Intermediate (WTI), the US Crude Oil benchmark, subdued for a second consecutive day on Thursday. During Asian trading, prices hover just below the mid-$87.00s, remaining close to the near one-month low recorded the day before.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Crude oil came under pressure as traders priced out geopolitical risk following a pledge by Democratic leaders on Wednesday to seek an end to the Iran war. The pledge followed sweeping victories in the US midterm elections that gave the party control of both Chambers of Congress. Chuck Schumer, the top Senate Democrat, suggested that control over government funding could be used to pursue that objective.

Energy markets nevertheless remain focused on the Strait of Hormuz, where shipping disruptions could restrict global supplies. Iran said the US response to its conditions for reopening the strategic waterway was unsatisfactory. Concerns over shipment security in the region also intensified after another oil tanker was struck off Oman's coast near the Strait of Hormuz.

Continued selling pressure on the US Dollar (USD) could also lend support to the USD-denominated commodity. It would therefore be prudent to await strong follow-through selling before concluding that crude oil prices have peaked and positioning for a continuation of the recent steep pullback. That decline began at the 104.00 mark reached last Friday, the highest level since May.

What does WTI's daily chart indicate?

Can Technical Support Keep Crude Oil's Outlook Constructive?

The technical backdrop for Crude Oil remains constructive as long as prices hold above the 100-day Simple Moving Average (SMA) at $86.11 and the latest upswing's 50.0% Fibonacci retracement at $85.59. Following the pullback from multi-month highs, this support confluence suggests underlying demand on dips.

Should prices break below this area, attention would shift to deeper support at $81.27, the 61.8% retracement, and $75.12, the 78.6% level. Further below, the previous swing-low area at $67.29 provides a more distant floor. Any recovery would initially face resistance at $89.91, the 38.2% Fibo. retracement, before the 23.6% level at $95.25 and the recent cycle-high area at $103.89.

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

WTI Oil: Key Questions Answered

What distinguishes WTI Oil?

Among the varieties of Crude Oil traded internationally, WTI, short for West Texas Intermediate, is one of three major types alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. Regarded as a high-quality Oil, it is straightforward to refine. Produced in the United States, WTI is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an Oil-market benchmark, with its price regularly cited in the media.

Why do WTI Oil prices change?

Supply and demand determine WTI Oil prices, as they do those of other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. On the supply side, political instability, wars and sanctions can cause disruptions that affect prices. Decisions taken by OPEC, a group of major Oil-producing countries, are another important influence. WTI Crude Oil prices also respond to the value of the US Dollar because Oil is traded mainly in US Dollars. A weaker US Dollar can therefore make Oil more affordable, while a stronger one can have the opposite effect.

What do inventory figures mean for WTI Oil prices?

WTI Oil prices respond to the weekly Oil inventory reports issued by the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock changes reflect shifts in supply and demand. A decline in inventories can signal stronger demand and lift Oil prices; rising inventories can point to greater supply and weigh on prices. Every Tuesday brings the API report, followed the next day by the EIA release. The two sets of figures are generally similar: 75% of the time, they fall within 1% of each other. As the EIA is a government agency, its data is regarded as more reliable.

Why do OPEC decisions matter for WTI Oil prices?

Production quotas agreed by OPEC (Organization of the Petroleum Exporting Countries) often affect WTI Oil prices. The group comprises 12 Oil-producing nations, which jointly set quotas for member countries at meetings held twice a year. Lower quotas can restrict supply and lift Oil prices, whereas an increase in OPEC production has the reverse effect. The broader OPEC+ grouping includes ten additional non-OPEC members, most notably Russia.