Crude oil prices have dropped significantly as tensions surrounding the US-Iran conflict eased ahead of the election. December WTI crude is on track for one of its steepest weekly declines in recent times, losing $11.37 (11.10%) from its opening value of $102.39. After peaking at $102.75, prices plummeted to $86.65 by the end of the week.
By early Friday, the contract hovered around $91.58, still down sharply for the week. The drop wasn’t caused by weaker demand or a sudden inventory surge. Instead, traders scaled back bets on prolonged conflict risks, which had pushed prices toward October peaks. Optimism over a faster resolution to the Iran dispute, fueled by midterm election outcomes, drove the adjustment.
Election Results Triggered the Break
The steepest selling occurred after Democrats reclaimed Congress, heightening expectations of political deadlock in Washington. This shift also suggested a Democratic-led Congress might push the administration to de-escalate the conflict. Soaring fuel costs had already become a key election issue, with Vice President JD Vance attributing Republican losses to the Iran situation. Meanwhile, President Trump showed no plans for new military actions against Iran.
Investors viewed these changes as reducing the likelihood of further escalation, prompting aggressive profit-taking. For months, WTI had been propped up by fears of supply disruptions in the Strait of Hormuz. But with political signals leaning toward de-escalation, traders grew less willing to hold premiums tied to geopolitical risks.
The price break didn’t mean geopolitical risk disappeared. Iranian officials said the two sides remain far from an agreement. Tanker-related incidents in the Persian Gulf continued. However, the market shifted its attention from potential problems to possible improvements. These could arise if talks lead to a ceasefire or a shipping agreement.
Gulf Supply Is Recovering
The actual supply situation also weakened support for high prices. Gulf crude exports—excluding Iran—have reportedly rebounded to near pre-war levels, as producers rerouted shipments through alternative pipelines, guarded convoys, and vessel transfers to avoid high-risk zones. Regional output near 18 million barrels per day revealed the market’s resilience, adapting more effectively than many anticipated.
While some shipping routes still face military and insurance risks, the physical market is less strained than it appeared when conflict fears drove prices upward. This explains why political developments triggered such a sharp correction. Had Gulf exports remained severely restricted, diplomatic hopes might not have caused such a dramatic pullback.
With supply chains stabilizing, traders had more flexibility to unwind long positions. The latest EIA report included bullish details that slowed the decline but couldn’t reverse it. US crude inventories dropped by about 900,000 barrels to 409.8 million barrels—the fifth straight weekly decrease. Stocks now sit roughly 4% below the five-year average.
Distillate supplies fell by 3.6 million barrels to their lowest point since 2003, while gasoline stocks also declined, signaling steady demand for refined fuels, particularly diesel and heating oil. US oil production hit a record near 14 million barrels per day, and refineries operated at about 94.5% capacity, keeping crude inventories tight despite ample overall supply.
The drawdown data was supportive. However, it couldn’t overcome broader repositioning. When a market removes a geopolitical premium, traders focus less on routine weekly inventory numbers. They focus more on whether the source of the supply threat is fading. The direction of Iran talks and Gulf shipping flows will remain primary drivers next week.
WTI crude futures are sharply lower, confirming a bearish reversal pattern. The broader trend remains upward, according to weekly charts, but a close above $104.99 would reinforce it. A move below the recent low at $86.00 would flip the trend to bearish. The short-term range is $86.00 to $104.99, with key retracement support between $95.50 and $93.25.
Technical Analysis and Market Outlook
December WTI crude oil futures are experiencing a sharp decline, confirming a bearish closing price reversal top. This pattern typically leads to a 2- to 3-week correction, covering 50% to 61.8% of a major price swing.
The long-term range, from $66.98 to $104.99, has a retracement zone between $85.99 and $81.50. This creates a complex situation. However, value traders could enter the market within the $85.99 to $81.50 range. This could trigger a volatile short-covering rally.
Market forces and Trader Behavior
The current chart pattern presents a complex scenario, potentially pitting swing traders against value traders. Swing traders may exit long positions if prices fall below $86.00, while value traders could step in if the retracement zone of $85.99 to $81.50 is tested. This interaction might trigger a volatile short-covering rally, pushing prices back toward the $93.00 to $95.00 range.
Alternatively, buyers who entered during this week’s drop to $86.65 may drive prices above the short-term 50% level at $95.50. Sustaining this rally could bring $104.99 into focus. However, if $81.50 fails to hold, the market may test the 52-week moving average at $74.41, potentially leading to another volatile bounce.
Weekly Forecast and Key Drivers
The direction of December WTI crude oil futures for the week ending November 13 will likely depend on trader reactions around $94.70. A sustained move above this level would signal buyers’ return. Strengthening above $95.50 could lead to a retest of $104.99.
Positive developments, such as a ceasefire or shipping agreement, could pressure WTI prices lower. Conversely, military escalation or disruptions to Gulf exports could quickly bring buyers back into the market.
