WTI Price Forecast: Holds on to key 200-day SMA support near $86.00

• With losses approaching 15% so far this week, WTI oil prices remain just above $86.
• Hopes of a swift end to the war in Iran have strengthened following Trump's midterm election defeat.
• On the technical front, prices are holding on to crucial support at the 200-day SMA.

A 14.25% fall so far this week has left US benchmark West Texas Intermediate (WTI) trading at $87.50 a barrel at the time of writing, following a test of support near $86.00 at the 200-day Simple Moving Average (SMA). Oil is recording its steepest weekly decline in months as the Democrats' landslide victory in the US midterm elections raises hopes that the war against Iran will end.

Wednesday's sharp sell-off in crude followed the resounding midterm election defeat of US President Donald Trump. The result confirmed disapproval of Republican policies, particularly the war in Iran and the effects of the resulting energy shock.

In an interview with the Financial Times on Wednesday, Trump maintained that he did not regret intervening in Iran, while stating that the US had no immediate plans to resume hostilities. Vice President JD Vance also identified the war in Iran as the principal reason for the election results on Wednesday, fuelling hopes that the government will seek a swift exit from the conflict.

Further losses in crude are being limited by persistent concerns over supply disruptions. Iran's Islamic Republican Guard Corps (IRGC) said on Thursday that two oil tankers had caught fire while attempting to pass through the Strait of Hormuz via what they called "an unauthorised route".

Technical Analysis: WTI Tests Crucial Support Near $86.00

Momentum has weakened markedly as WTI US Oil trades at $87.52, only slightly above its 200-day simple moving average (SMA). On the daily chart, the Relative Strength Index (RSI) has fallen to 36.5. Meanwhile, the Moving Average Convergence Divergence (MACD) line has moved below the Signal line and the histogram has become more negative. Together, these indicators suggest the recent retreat is gathering pace, even though the broader trend remains positive.

A confirmed break below the $86.00 area would be viewed as a sign of a shift in trend, increasing downward pressure towards the late August lows around $79.30, followed by the 3 August low near $73.50. Any recovery would first encounter resistance at former support around $94.50, the 2 November low, before reaching last week's highs above $103.67.

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