WTI crude prices are down 5% today in a rout that's followed Saudi Arabia's move to lower the official selling price for February-loadings of Arab Light oil to Asia by $2 a barrel.
The move has increased concern that the market is oversupplied in Q1, which is traditionally the weakest-demand period of the year. OPEC+ had hoped that cuts would leave the market undersupplied in Q1, or at least close to balance.
This sharp drop in oil prices is also coming despite worries about an expanding Middle Eastern warn to Lebanon and the shipping problems in the Red Sea. All told, it's not a pretty picture for oil but crude does remain within last week's range.
Eyes are on $70 and that will continue until today's settlement. Below that, the area around $66-$68 has been critical for WTI as it bottomed there several times in 2023.
In terms of broader markets, the drop in oil is deflationary and that's led a bid in bonds. In turn, that's weighing on the US dollar and helping to lift equities.