WTI falls below $86.50 as midterm elections lift hopes of an end to Iran war

• At close to $86.40, WTI trades sharply lower in early European dealing on Thursday.
• Control of both the House of Representatives and the Senate passed to the Democrats.
• An 865,000-barrel decline in crude oil stocks was recorded in the week ended 30 October, according to the EIA.

At around $86.40 in Thursday’s early European session, West Texas Intermediate (WTI), the US crude oil benchmark, is moving lower following the midterm elections. The decline comes after President Donald Trump’s Republican Party lost control of Congress.

Tuesday’s vote handed the Democrats majorities in both the US Senate and House of Representatives, displacing the Republicans. With political gridlock now more likely in the US, the result has reduced expectations of renewed military strikes against Iran by Trump.

Having said on Tuesday that Washington had no immediate plans to attack Iran, Trump acknowledged on Wednesday that the Iran war had contributed to his party’s sweeping midterm defeat. These remarks have put some downward pressure on WTI.

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,"

An 865,000-barrel fall in US crude stockpiles in the week ending 30 October was smaller than the market had anticipated, Energy Information Administration (EIA) figures showed. Inventories had declined by 1.892 million barrels the previous week, while consensus forecasts had pointed to a 900,000-barrel draw for the latest period.

Brent outlook remains tied to Middle East diplomacy

TD Securities says the US midterm election results have “further” strengthened its view that “the expectation for a deal as opposed to escalation in the Middle East” is “the main drag on crude oil prices,” while a persistent “diplomacy headline drag remains” on the market. Looking 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,” and identifies “potential for upside via risk premium so long as the Middle East and Russia-Ukraine conflicts remain unresolved.”

Technical Analysis: WTI holds above its 100-day SMA

Although WTI US Oil is holding just above its 100-day Simple Moving Average (SMA) on the daily chart, the broader technical structure remains bearish. Prices sit well below the 20-day Bollinger middle band, suggesting that medium-term overhead resistance is containing the market. A Relative Strength Index (14) reading near 35 signals subdued momentum, suggesting that sellers retain the upper hand even with trend support close by.

Immediate trend support lies at the 100-day SMA of $86.10. A sustained move below that level would likely pave the way for further declines, consistent with the weak RSI reading. Any recovery would initially encounter resistance at the lower Bollinger band around $87.60. Beyond that, the middle band near $96.60 and the upper band around $105.60 represent stronger obstacles should the rebound continue.

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