Key Moments
- WTI trades near $86.40 in early European dealings on Thursday after a sharp decline.
- Democrats secure control of both the U.S. House of Representatives and the Senate, dampening expectations of renewed military action against Iran.
- U.S. crude inventories fall by 865,000 barrels in the week ending October 30, missing expectations for a 900,000-barrel draw.
Election Shift Weighs on U.S. Crude Benchmark
West Texas Intermediate (WTI), the primary U.S. crude oil benchmark, is quoted around $86.40 in early European trading on Thursday, extending a move lower following the U.S. midterm election results.
The decline comes after President Donald Trump’s Republican Party lost control of Congress. Democrats captured majorities in both the Senate and the House of Representatives on Tuesday, taking over from Republicans. The new balance of power is seen as increasing the likelihood of legislative deadlock in Washington and reducing the perceived probability that Trump will pursue renewed military strikes against Iran.
Trump stated on Tuesday that Washington had no immediate plans to attack Iran, and on Wednesday he acknowledged that the Iran war had contributed to his party’s broad losses in the midterms. These comments added to the selling pressure on WTI.
“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,” said Dennis Kissler, senior vice president of trading at US financial services firm BOK Financial.
Inventory Data Shows Smaller-Than-Expected Draw
Fresh supply data has done little to support prices. U.S. crude oil inventories declined by less than anticipated in the latest reporting week. Energy Information Administration (EIA) figures show crude stockpiles fell by 865,000 barrels in the week ending October 30. That compares with a prior-week draw of 1.892 million barrels and a market consensus looking for a 900,000-barrel reduction.
| Indicator | Latest Week | Previous Week | Market Expectation |
|---|---|---|---|
| Crude inventory change (barrels) | -865,000 | -1,892,000 | -900,000 |
Brent Narrative Shaped by Middle East Diplomacy
The outlook for Brent crude remains closely tied to geopolitical developments in the Middle East. According to TD Securities, a persistent “diplomacy headline drag remains” on crude, with “the expectation for a deal as opposed to escalation in the Middle East” still seen as “the main drag on crude oil prices,” a view that has been “further” reinforced by the US midterm election results.
The bank maintains that beyond the “potential for a near-term overshoot,” crude is likely to “settl[e] into a higher-for-longer regime, with fair value for Brent crude oil remaining in the $90-100/bbl range,” and highlights “potential for upside via risk premium so long as the Middle East and Russia-Ukraine conflicts remain unresolved.”
Technical Picture: WTI Holds Above 100-Day SMA
From a technical standpoint, WTI US Oil is trading just over its 100-day Simple Moving Average (SMA) on the daily chart. Even so, the broader setup is bearish, with prices staying well below the 20-day Bollinger middle band, signaling that medium-term resistance continues to cap the market.
The Relative Strength Index (14) sits near 35, indicating subdued momentum and suggesting that selling interest continues to dominate even as prices approach trend support.
| Technical Level | Approximate Price | Comment |
|---|---|---|
| Immediate support – 100-day SMA | $86.10 | Key trend floor; a sustained break could trigger deeper losses. |
| Initial resistance – lower Bollinger band | $87.60 | First upside obstacle on any rebound. |
| Medium resistance – Bollinger middle band | $96.60 | Stronger resistance if recovery extends. |
| Upper resistance – upper Bollinger band | $105.60 | Next major cap on a more pronounced rally. |
A clear and sustained move below the 100-day SMA at $86.10 would likely align with the weak RSI profile and open the door to further downside.
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