WTI crude oil gains 2.72%, closes at $90.52 as support holds

On Thursday, U.S. crude oil futures closed at $90.52 per barrel, gaining $2.40, or 2.72%, compared with Wednesday's settlement of $88.12. This rebound came after a drop of more than 8% on Wednesday, when the U.S. midterm elections raised hopes that a Democratic-led Congress would push the Trump administration harder to end the conflict with Iran.

Gulf shipping risks have reemerged as a focus for traders.

Senate Democratic leader Chuck Schumer stated on Wednesday that Democrats would try to stop the war, noting Congress's authority over expenditures. By Thursday, market participants were again assessing the threat to oil shipments. According to Reuters, citing UK Maritime Trade Operations, at least five vessels have reported incidents in the Gulf since Sunday. Meanwhile, Iran's foreign minister held talks with his counterparts from Saudi Arabia and Qatar regarding diplomatic initiatives. The possibility of de-escalation removed some risk premium from oil on Wednesday. The vessel incident reports then gave traders cause to restore some of that premium on Thursday.

The U.S. inventory report for Wednesday also indicated declines in crude oil, gasoline and distillate stocks for the week ending October 30. These draws provided some support heading into Thursday's trading.

Buyers held the line at $86.65 to $86.93. Can they now move beyond $91.56?

On the WTI chart, the decline hit $86.65, which at that point was close to the 200-day moving average. The 100-day moving average lay between that low and the 50% retracement level of the uptrend from July's low, at $86.93. This created a clearly defined area that buyers could use as support, and they did exactly that.

The next resistance level is $91.56, which represents the breached 38.2% Fibonaci retracement of the same upswing. The futurs settled $1.04 below that level. If prices rise above $91.56 and hold, buyers would gain more space to recover from Wednesday's drop. If they pause there, sellers can use that level as resistance. A drop back below the $86.65 to $86.93 range would bring the 61.8% retracement level at $82.30 into focus.

A trading takeaway from this price action: the bounce off support.

A bounce from a support level indicates where buyers were ready to enter. The next signal will appear at the former support area. If buyers manage to reclaim $91.56 and maintain it during a pullback, they will have a nearer reference point to manage their risk. If sellers successfully defend that level, the bounce is still subject to a renewed test of the low points.