It was a slow ride up the escalator for oil but it's turned into a quick fall back down the elevator.
WTI crude oil is down $4.87 to $84.36 which is a quick change in fortunes after touching $95 last week. The fall through $85 ran stops at the psychological level which doubled as the August high.
This is undoubtedly a squeeze in oil, which has gotten progressively more-crowded over the past month.
Fundamentally, there has been nothing to trigger this kind of move. Earlier today OPEC and Saudi Arabia affirmed there were no plans to change output this year.
For the broader market, the drop in oil is great news. It diminishes the inflationary impulse since August and combined with narrowing gasoline cracks, will offer consumers notably lower gasoline prices. That should take some of the pressure of bonds and give equities a boost.
Technically, quick moves like this tend to overextend then stabilize relatively quickly but -- like i wrote earlier -- the bulls shouldn't be too quick to try and catch a falling knife.
