WASHINGTON (dpa-AFX) - Adding to the two previous sessions of losses, crude oil prices have gone into freefall on Wednesday, losing the geopolitical risk premium as a comfortable victory for the Democrat party in the U.S. midterm elections eased concerns of renewed U.S.-Iran escalation.
WTI Crude Oil for December delivery was last seen trading down by $8.39 (or 8.73%) at $87.70 per barrel.
Today, the results for the U.S. midterm elections which were held yesterday revealed a landslide for Democrat party, with the party capturing majorities in both the Senate and the House of Representatives.
Of particular note, six Senate seats flipped to Democrats, with Kansas, South Carolina, and Texas voter electing Democratic Senators for the first time in decades. Seats in North Carolina and Ohio that were held by Republicans also flipped to Democrats.
Distancing himself from the losses, U.S. President Donald Trump stated that Republicans lost since he was not on the ballot and refused to admit that the results were a referendum on his current presidency.
Poll analysts observed that the results underscore the need to address the rising cost of living as the U.S.-Iran war and the resultant supply disruption continues to drive up fuel prices.
Despite prominent Iranian leaders stating that the results were proof that the U.S. citizens rejected a war with Iran, Iran's Supreme Leader Mojtaba Khamenei cautioned that the U.S. attitude towards Iran will not change.
Khamenei added that Iran continues to remain on high alert against renewed strikes and warned that an Iranian response would be on a larger scale.
Energy experts are also concerned that Trump could look for compensating the election setback by conducting a military campaign against Iran.
Weeks before, various media outlets reported that after the November 3 elections, U.S. forces might carry out a short but intense attack on Iran with an aim to cripple its military capabilities.
Despite the uncertainty over how the U.S. would deal with Iran, as of now, markets have lowered the geopolitical risk premium attached to crude oil.
According to the American Petroleum Institute, crude oil inventories decreased by 5,267,000 barrels for the week ending October 30, contrary to market expectations for a 2,100,000-barrel increase and following a 2,031,000-barrel decline of the previous week.
According to the U.S. Energy Information Administration, for the week ending October 30, the crude oil inventories decreased by 870,000 barrels. At Cushing's Oklahoma Delivery Hub, the inventories increased by 280,000 barrels.
For the same period, gasoline inventories decreased by 222,000 barrels, distillate inventories (which include diesel and heating oil) decreased by 3,565,000 barrels, and heating oil inventories decreased by 203,000 barrels from 164,000 barrels of the previous week.
The U.S. dollar index was last seen trading at 101.51, down by 0.35 (or 0.34%) today.
Currently, traders are of the view that today's victory for Democrats could constrain war funding. The new candidates will not assume their seats until January 3, leaving the Trump administration two months' time for deciding on either diplomatic measures or a military campaign to end the crisis.
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