Below $87.50: WTI remains under pressure as Democrats seek to end Iran war after midterm sweep

WTI faces a second consecutive day of selling. Hopes that the Iran war could end weigh on prices.
A geopolitical risk premium persists as the US and Iran remain at odds over the Strait of Hormuz.
Continued USD selling could provide additional support for oil, leaving bears with reason for caution.

WTI trades just below the mid-$87.00s in Thursday’s Asian session. West Texas Intermediate (WTI), the benchmark for US crude oil, remains under pressure for a second consecutive day, close to the near one-month low reached on Wednesday.

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

Following sweeping victories in the US midterm elections that secured control of both Chambers of Congress, Democratic leaders pledged on Wednesday to seek an end to the Iran war. Chuck Schumer, the top Senate Democrat, indicated that the party could leverage its control of government funding to pursue that objective. Traders consequently reduced the geopolitical risk premium, putting downward pressure on crude prices.

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

At the same time, persistent selling of the US Dollar (USD) could support the dollar-denominated commodity. Strong follow-through selling would therefore be needed before concluding that crude prices have peaked and positioning for a further decline. Prices have already retreated sharply from the 104.00 mark reached last Friday, their highest level since May.

WTI daily price chart

$86.11 and $85.59: Key technical support

Above the 100-day Simple Moving Average (SMA) at $86.11 and the latest upswing’s 50.0% Fibonacci retracement at $85.59, crude oil retains a constructive outlook. This support confluence suggests underlying demand on dips following the recent retreat from multi-month highs.

Below this zone, the next support levels would come into focus at $81.27, the 61.8% retracement, and $75.12, the 78.6% level. Further down, the previous swing-low area at $67.29 provides a more distant floor. Any advance would first encounter resistance at $89.91, the 38.2% Fibonacci retracement, ahead of 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

What defines WTI Oil?

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

Which forces shape WTI Oil prices?

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

Why do inventory reports matter for WTI Oil prices?

WTI oil prices respond to weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA). Inventory movements signal changes in the supply-demand balance. Falling stocks may suggest stronger demand and lift prices, whereas rising inventories may point to increased supply and weigh on prices. The API releases its report every Tuesday, followed by the EIA the next day. The two sets of figures tend to be similar: they are within 1% of each other 75% of the time. As a government agency, the EIA is viewed as the more reliable source of data.

How do OPEC decisions affect WTI Oil prices?

At meetings held twice a year, OPEC (Organization of the Petroleum Exporting Countries) brings together 12 oil-producing nations to agree collectively on member countries’ production quotas. Those decisions frequently influence WTI oil prices. A reduction in quotas can restrict supply and lift prices, while increased OPEC production has the reverse effect. The broader OPEC+ group adds ten non-OPEC members, with Russia the most notable among them.