WTI holds losses around $95.00 following US midterm elections
- WTI could rise amid geopolitical tensions and US election shifts.
- Traders monitor US-Iran tensions and potential policy shifts after Democrats capture Congress.
- Conflicting US military signals and recent price rallies prompt traders to take profits.
West Texas Intermediate (WTI) depreciates after posting modest gains in the previous day, trading around $95.00 per barrel during European hours on Wednesday. Crude oil prices may appreciate as market caution emerges ahead of Washington's decision in the US-Israeli war on Iran. This shift comes after Democrats captured control of Congress from President Donald Trump's Republicans in the midterm elections. Vote counting was underway in the US midterms, with Democrats snaring majorities in both houses of Congress for the rest of Trump's second term.
According to Reuters, Priyanka Sachdeva, head of market insights at Phillip Nova, noted 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". She added that "some profit-taking and reduction in speculative long positions are justified, particularly after the sharp rally in October".
Diplomatic efforts and ongoing military action continue to shape the regional landscape. Qatar’s Foreign Ministry spokesperson stated that both countries are currently evaluating new proposals put forward by mediators to bridge their differences. However, Iran’s national security chief indicated in a social media post that Washington’s response remains unsatisfactory.
Meanwhile, the US conducted defensive strikes against Iran earlier this week, targeting surface-to-air missile systems used against American assets. Nevertheless, the limited scope of these strikes suggests there is no immediate return to large-scale military operations.
Nasdaq and USD rebound as Trump signals willingness to work with Democrats
Analysts at Rabobank observe that “on the back of the Democrat sweep in Congress in the US mid-term election both Nasdaq futures and the USD predictably softened.” However, they note that “perhaps the bigger surprise is that both have already started to reverse their early losses,” a move they link directly to “comments that President Trump is looking to work with Democrats in Congress.” This rapid shift in market tone highlights how quickly US assets can reprice as political signals evolve.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.