WTI Crude Oil – Midterm Elections, Iran Risk and a Critical Test of Channel Support

 

November 4, 2026 | Technical & Fundamental Analysis

Market Outlook

WTI crude oil is approaching an important technical decision point. Yesterday's price action brought the market directly to the lower boundary of the rising channel, where buyers managed to step in and produce a noticeable bounce.
The timing is particularly interesting. The US midterm elections delivered a major victory for Democrats, who secured control of both chambers of Congress, marking a significant political setback for Donald Trump and the Republican Party.
The market appears to have interpreted this development positively, potentially expecting a reduction in the probability of further military escalation between the United States and Iran. Combined with hopes of diplomatic progress, this may explain why crude oil experienced significant selling pressure.
In other words, the market may already be pricing in part of the expected geopolitical relief.
However, I would be careful about assuming that the conflict is approaching its end. In my view, the risk of another US attack on Iran remains significant, particularly following Trump's political defeat. A more unpredictable foreign policy response cannot be ruled out.
Technically, WTI has defended the lower boundary of its rising channel, but the recovery still needs confirmation.
Another interesting aspect is the potential Double Top formation around $106.50. I consider this an unfinished pattern, and I would not be surprised to see the market revisit this area before making a more decisive move.
For now, the situation remains open. The next direction could depend as much on developments in Washington and Tehran as on the technical structure itself.

Technical Analysis

D1 – Daily Chart

The daily chart continues to show a broader rising channel that has been developing since the July lows.
The latest correction brought price towards the lower boundary of this channel. The daily candle reached a low of approximately $94.90 before recovering towards $96.30.
This reaction is important because buyers have managed to defend the broader technical structure, at least for now.
The first major resistance area is the supply zone between approximately $99.00 and $102.50. This area previously attracted selling pressure and will be the first important obstacle for any meaningful recovery.
Above it, the previous highs around $105.00–$106.50 become relevant.
The area around $106.50 deserves particular attention because of a potential Double Top formation. However, I consider this an unfinished formation rather than a confirmed bearish reversal pattern.
My expectation is that the market could attempt another move towards this area, potentially completing the second top. Only a subsequent rejection and a break below the relevant neckline would confirm the bearish pattern.
On the downside, the lower channel boundary around $94.00–$95.00 remains the most important immediate reference.
A sustained daily close below the channel would weaken the current bullish structure and could expose the next demand area around $87.00–$88.00.
A deeper correction could eventually bring the market towards the larger demand zone around $74.00–$76.00, although this remains a much more distant scenario.

H4 – Short-Term Structure

The H4 chart provides a more detailed picture of the latest price action.
After reaching the upper part of the channel, WTI experienced a sharp bearish move. However, the sell-off eventually reached the lower channel boundary, where buyers stepped in and produced a noticeable recovery.
The latest price is trading around $96.30.
There are several levels I would monitor:

• $94.00–$95.00: Immediate channel support and the area where buyers recently defended the structure.

• $92.00–$93.00: Next potential demand area if channel support fails.

• $96.50–$97.00: Immediate equilibrium area and an important short-term reference.

• $99.00–$100.00: First resistance area and the lower part of the nearby supply zone.

• $100.00–$102.50: Broader H4 supply zone where sellers could become active again.

• $105.00–$106.50: Previous highs and the potential Double Top area.
  The immediate bullish signal would be a successful recovery above the equilibrium area, followed by a break through the nearby supply zone.
  On the other hand, another rejection below $99–$100, followed by a return towards channel support, would suggest that sellers still control the short-term structure.
  The recent bounce is encouraging, but I would like to see further confirmation before considering the correction complete.

Fundamental Analysis

1. US Midterm Elections – A Political Turning Point

The US midterm elections have produced a major political shift. Democrats secured control of both the Senate and the House of Representatives, delivering a substantial setback for Trump's administration.
For oil markets, the result could have several implications.
A Democratic-controlled Congress means greater scrutiny of the administration's foreign policy and military decisions. It could also make it more difficult for Trump to pursue his political agenda without opposition.
Markets may interpret this as a reduced probability of further escalation with Iran.
This could explain part of the recent decline in oil prices, as traders begin to price in a potentially more diplomatic approach.
However, there is another side to this development.
Trump could respond to the political defeat with a more aggressive foreign policy approach. His ability to conduct military operations has not automatically disappeared with the change in congressional control.
The election result therefore creates a new political environment, but it does not eliminate geopolitical risk.

2. Iran – The Risk of Further Escalation Remains

Despite the recent optimism surrounding diplomatic negotiations, I believe the risk of another US attack on Iran remains significant.
The outcome of the midterm elections could actually make the situation more unpredictable. Trump's Republicans have suffered a major political defeat, and I would not rule out the possibility that Trump could respond by taking a more aggressive foreign policy approach.
In my view, the risk of further military escalation should not be underestimated, particularly given Trump's political position after the elections.
There is also a possibility that the market is becoming too optimistic about a diplomatic solution. The recent decline in oil prices suggests that traders are already pricing in a significant reduction of the geopolitical risk premium. However, the underlying conflict remains unresolved.
Any renewed US military action, Iranian retaliation or disruption of shipping through the Strait of Hormuz could quickly reverse the current price movement.
The Strait of Hormuz remains one of the world's most important energy chokepoints. Any prolonged disruption could have a substantial impact on global oil supply.
This leaves the market exposed to two very different scenarios:
Diplomatic scenario: An agreement between Washington and Tehran could reduce the geopolitical risk premium, restore shipping flows and create further downward pressure on crude prices.
Military escalation: Renewed attacks or a prolonged disruption of shipping could quickly reverse the recent decline and trigger another sharp increase in oil prices.
For now, I am reluctant to become overly bearish at current levels. The geopolitical situation remains an important source of upside risk for crude oil.

3. API Inventories – A Strong Bullish Surprise

The latest American Petroleum Institute report delivered a significant bullish surprise.
US crude inventories decreased by 5.267 million barrels, compared with market expectations for an increase of approximately 2.1 million barrels.
That represents a difference of more than 7.3 million barrels compared with expectations.
The other reported figures were more mixed:

• Crude oil: -5.267 million barrels.

• Cushing crude inventories: +0.510 million barrels.

• Gasoline inventories: +1.427 million barrels.

• Distillate inventories: -1.190 million barrels.
  The headline crude inventory draw is clearly supportive for oil prices. However, the increase in gasoline stocks suggests that the broader petroleum product picture is not entirely bullish.
  The official EIA report is scheduled for Wednesday, November 4, at 10:30 AM Eastern Time (16:30 CET).
  The market will be looking for confirmation of the latest API draw. API and EIA figures can differ, so the official numbers will be particularly important.
  If EIA confirms another substantial decline, it could provide additional support for WTI and help buyers defend the current technical structure.

4. Supply, Demand and the Geopolitical Risk Premium

The recent decline in oil prices should also be viewed in the context of the broader market.
For several months, the conflict involving Iran has created significant uncertainty around global energy supply. Higher transportation costs, shipping disruptions and the risk of further military escalation have all contributed to elevated oil prices.
The possibility of a diplomatic agreement has therefore created room for a substantial correction.
But removing the geopolitical premium is not the same as restoring normal supply conditions.
Even if negotiations progress, shipping routes, insurance costs and regional security will take time to normalize.
On the other hand, a prolonged period of high oil prices creates pressure on global demand, increases transportation costs and contributes to inflation.
The market is therefore balancing two opposing forces: the possibility of improved supply conditions and the economic consequences of prolonged energy disruptions.
This is particularly important because the oil market is highly sensitive to changes in expectations. Sometimes prices move well before any actual change in physical supply takes place.

What Comes Next?

I see three main scenarios for the coming sessions.
Bullish scenario
Buyers successfully defend the lower channel boundary around $94–$95. The market regains the H4 equilibrium area and breaks through the $99–$102.50 supply zone.
This could open the way towards $105–$106.50, where the potential Double Top formation becomes particularly interesting.
A return to this area could complete the second top. A decisive breakout above the previous high, however, would invalidate the bearish interpretation.
Bearish scenario
Diplomatic progress continues, the geopolitical risk premium gradually disappears and the latest recovery fails below the $99–$102.50 resistance zone.
A sustained break below $94 would weaken the rising channel and expose the next demand area around $92–$93, followed by $87–$88.
Sideways scenario
The market remains trapped between geopolitical optimism and the risk of another military escalation. WTI consolidates between channel support and the nearby supply zone while traders wait for further developments in Iran and confirmation from the EIA inventory report.

Conclusion

WTI has reached an important technical and fundamental crossroads.
The reaction from the lower boundary of the rising channel suggests that buyers are still willing to defend the current bullish structure.
At the same time, the political developments in Washington and the possibility of a diplomatic agreement with Iran have created a reason for the market to remove part of its geopolitical risk premium.
However, I would not underestimate the possibility of further military escalation. Trump's political defeat could change the administration's calculations, and the risk of another US attack on Iran remains an important factor.
The latest API report provides a strong bullish fundamental signal, while the official EIA numbers will be the next important catalyst.
Technically, I am watching $94–$95 on the downside and the $99–$102.50 supply zone on the upside.
I am also keeping an eye on the potential Double Top around $106.50. In my view, this formation is not finished yet, and I would not be surprised to see the market attempt another move towards that area.
For now, I prefer to remain patient and let price action provide confirmation.
The market has bounced from channel support. Whether this develops into another bullish leg or turns out to be only a temporary recovery remains to be seen.
The next move could be determined as much by Washington and Tehran as by the charts.
This analysis represents my personal technical and fundamental interpretation of the market and is not financial advice.