WTI trades near $95.00 as losses persist after US midterm elections

• Geopolitical tensions and US electoral shifts could lift WTI.
• Democrats’ capture of Congress puts possible policy changes in focus, as traders also watch US-Iran tensions.
• Recent price gains and mixed US military signals encourage profit-taking among traders.

At around $95.00 per barrel during Wednesday’s European trading hours, West Texas Intermediate (WTI) is easing after the previous day’s modest advance. Caution ahead of Washington’s decision on the US-Israeli war on Iran could support crude oil prices. The shift follows the Democrats’ capture of Congress from President Donald Trump’s Republicans in the midterm elections. With vote counting still under way in the US midterms, Democrats were securing majorities in both houses of Congress for the remainder of Trump’s second term.

Reuters cited 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".

Both diplomacy and continuing military operations are shaping developments across the region. According to Qatar’s Foreign Ministry spokesperson, the two countries are assessing fresh proposals from mediators aimed at narrowing their differences. In a social media post, however, Iran’s national security chief said Washington’s response was still unsatisfactory.

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

Nasdaq and USD recover as Trump indicates readiness to cooperate with Democrats

Rabobank analysts attribute the initial weakness to the election result, observing 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, however, that “perhaps the bigger surprise is that both have already started to reverse their early losses,” directly linking 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 US assets can reprice in response to changing political signals.