Oil prices dropped sharply on Wednesday as the results of the U.S. midterm election increased hopes for peace deal between the U.S. and Iran. Brent oil dropped over 9% while WTI oil dropped by over 8%. Investors now expect Democratic control of Congress to increase pressure on President Trump to seek peace deal with Iran.
If the agreement is reached with Iran, it may ease disruptions of shipping in the Middle East and bring more oil to the market. This prospect can keep oil prices under pressure in the short term as the talks continue with Iran.
But the drop in U.S. inventories may limit further losses in oil prices. The chart below shows that the crude oil stocks dropped by 865,000 barrels. Distillate inventories also dropped by 3.6 million barrels. The small stockpiles leave less protection against fresh supply disruptions.
I think that any further progress towards peace deal with Iran may extend the sell-off in the oil market but any new attacks on tankers or oil facilities may quickly lift prices again from the support areas.
WTI Oil Price Forecast: Break Below $87 Could Push Prices to $78
The daily chart for WTI oil shows that the price failed to break above the key level around $104 which is highlighted by the red region on the chart. The price dropped significantly after marking a high at $104.99 on October 30 and fell straight toward the 200-day SMA near $87.
The pressure on WTI oil remains persistent which suggests that the price will likely break below the 200-day SMA. A break below $87 will likely open the way for further drop towards the $78 level. The support of $78 is defined by the rising trendline that stretches from the lows of December 2025. The break below $87 will also confirm the double top formation at the $104-$106 resistance region and suggest negative price action in the short term.
The 4-hour chart for WTI oil also shows that the price remains under pressure near $87. The level of $87 has been strong during the bullish price action of July and August. A break below this level will likely push the price to $80 in the short term.
Brent Oil Price Forecast
Every new Brent Oil analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Brent Oil forecastsBrent Oil Price Forecast: $90 in Focus After Sharp Sell-Off
The daily chart for Brent oil shows that the price failed to break above the $120 level and triggered a strong drop in price. The price has already closed below the 200-day SMA which suggests persistent pressure on prices in the short term.
The chart shows that the price has remained in sideways range between $72 and $120 in 2026. The price again failed to break above $120 in October and triggered significant correction from this level. This suggests that the market may again be heading towards the $70 region.
The weekly chart for Brent oil also shows the bearish pressure. The chart shows that the price failed to break above $120. The price has already lost over 16% this week. At the moment, the negative pressure on oil suggests that the price may head towards the $90 region in the short term.
What to Watch Next
Oil prices remain under pressure as hopes for peace deal between the US and Iran increased after the US election. The final agreement between the US and Iran will likely ease the supply disruption in the region and will bring more oil to the world. Therefore, the hopes for a peace deal may keep oil prices under pressure in the short term. However, any new escalation or any attacks may lift prices again. In my view, a break below $87 in WTI oil may open the way for a drop to $78.
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