Below $86.50: WTI tumbles as midterm elections raise hopes of an end to Iran war

$86.40 is within reach as WTI slumps in early European trading on Thursday.
Control of both the House of Representatives and the Senate went to the Democrats.
An 865,000-barrel decline in crude oil inventories was recorded in the week ended 30 October, according to the EIA.

$86.40 is the level around which West Texas Intermediate (WTI) is trading early in Thursday’s European session. The US crude oil benchmark is retreating after President Donald Trump's Republican Party lost control of Congress in the midterm elections.

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

Tuesday’s vote handed the Democrats majorities in both the US Senate and House of Representatives, ending Republican control. The result increases the prospect of US political gridlock while reducing expectations that Trump will restart military strikes against Iran.

Selling pressure on WTI has followed Trump’s latest remarks. On Tuesday, he said Washington had no immediate plans to strike Iran. He then acknowledged on Wednesday that the Iran war had contributed to his party’s sweeping midterm election defeat.

Dennis Kissler, senior vice president of trading at US financial services firm BOK Financial, said: "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,"

Last week’s draw in US crude oil inventories was smaller than forecast. Energy Information Administration (EIA) figures showed a decline of 865,000 barrels for the week ending 30 October, following a 1.892 million-barrel reduction the week before. Market consensus had pointed to a 900,000-barrel fall.

Brent Outlook Hinges on Middle East Diplomacy

TD Securities says the US midterm election results have “further” reinforced its view that “the expectation for a deal as opposed to escalation in the Middle East” is “the main drag on crude oil prices,” with a persistent “diplomacy headline drag remains” weighing on crude. Beyond the “potential for a near-term overshoot,” the bank expects crude to “settl[e] into a higher-for-longer regime, with fair value for Brent crude oil remaining in the $90-100/bbl range,” while identifying “potential for upside via risk premium so long as the Middle East and Russia-Ukraine conflicts remain unresolved.”

100-Day SMA Supports WTI: Technical Analysis

The daily chart shows WTI US Oil sitting marginally above its 100-day Simple Moving Average (SMA). The broader structure nevertheless remains bearish: prices are well below the 20-day Bollinger middle band, leaving medium-term resistance overhead. With the Relative Strength Index (14) close to 35, momentum remains weak. Selling pressure therefore appears to retain the upper hand even as trend support lies nearby.

Immediate trend support comes from the 100-day SMA at $86.10. A sustained break below that level would likely pave the way for further losses, consistent with the subdued RSI reading. For any recovery, the first resistance is the lower Bollinger band around $87.60. An extended rebound would face stronger obstacles at the middle band near $96.60 and the upper band around $105.60.

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

WTI Oil: Key Questions Answered

What defines WTI Oil?

Short for West Texas Intermediate, WTI is a crude oil grade traded internationally and one of the three major types alongside Brent and Dubai Crude. Its relatively low gravity and sulphur content earn it the descriptions “light” and “sweet”, respectively. This high-quality oil is considered easy to refine. Produced in the United States, it 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 by the media.

Which forces shape WTI Oil prices?

Supply and demand determine WTI oil prices, as they do for all assets. Stronger global growth can lift demand, whereas weak growth can have the reverse effect. Supply disruptions caused by political instability, wars or sanctions can also influence prices. Another major factor is policy set by OPEC, the group of leading oil-producing countries. Because oil is traded predominantly in US Dollars, the currency’s value also matters: a weaker US Dollar can make WTI crude more affordable, while a stronger currency can have the opposite effect.

Why do inventory figures affect WTI Oil prices?

WTI oil prices respond to the weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock changes capture shifts in supply and demand. Falling inventories may signal stronger demand and support prices. Rising stocks, by contrast, may indicate greater supply and weigh on prices. The API releases its report on Tuesdays, followed by the EIA the next day. The two sets of figures are generally similar: they are within 1% of each other 75% of the time. As the EIA is a government agency, its data is regarded as more reliable.

How do OPEC decisions affect WTI Oil prices?

At meetings held twice a year, the 12 oil-producing nations in OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. These decisions frequently influence WTI oil prices. Lower quotas can constrain supply and lift prices; increased output has the reverse effect. The broader OPEC+ grouping adds ten non-OPEC members, with Russia the most notable.