---
title: "Oil’s Tumble to 15-Month Low Accelerated by Algos, Options Moves"
description: "Oil extended its plunge as an unfolding banking crisis combined with supply-glut fears to fuel a wave of technical selling."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2023-03-15-oils-tumble-to-15-month-low-accelerated-by-algos-options-moves/"
published: "2023-03-15T18:47:07"
lang: "en-ZA"
word_count: 243
---

# Oil’s Tumble to 15-Month Low Accelerated by Algos, Options Moves

> Oil extended its plunge as an unfolding banking crisis combined with supply-glut fears to fuel a wave of technical selling.

By Bloomberg · Published 15 March 2023, 20:47 SAST

## Key points
- Oil prices have been on a downward spiral due to an oversupply of crude and banking-sector turmoil driving investors away from risky assets. With the US benchmark hitting December lows, traders are bracing for further losses as the bears take control of the market.
- Oil prices dropped to 15-month lows, driven by banking sector turmoil and delta hedging.
- Global market is now in oversupplied territory due to US crude stockpiles, OPEC production and Russian exports.
- Bears are in charge of the market, with traders in wait-and-see mode balancing optimism with Fed tightening.
- December lows of $65 a barrel should provide support for oil markets.

## Content

Both West Texas Intermediate and Brent crude tumbled to 15-month lows, with banking-sector turmoil driving investors — including trend-based traders — from risky assets. Also accelerating the selloff, according to UBS Switzerland AG, is a strategy called delta hedging, in which financial institutions limit their exposure to falling prices in the options market by dumping crude futures.

Oil’s three-day rout comes as the global market teeters into oversupplied territory. US crude stockpiles are expanding again, OPEC production rose in February and Russian exports remain resilient in the face of sanctions. The International Energy Agency [now expects supply](https://www.bloomberg.com/news/articles/2023-03-15/oil-market-in-surplus-as-russia-pumps-more-crude-iea-says) to exceed demand in the first half of the year.

“Bears are in charge here,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “There is just a massive amount of fear in the market.”

| Prices: |
| --- |
| - WTI for April delivery fell $4.63 to $66.70 a barrel at 12:19 p.m. in New York - Brent for May settlement dropped $5.10 to $72.35 a barrel |

The latest slide is the deepest since June 2022, with prices finally breaking out of a $10 trading range. So far this year, traders have been in wait-and-see mode, balancing aggressive monetary tightening from the Fed with optimism around China’s demand recovery. This week’s retreat sent the US benchmark into oversold territory on its 14-day relative strength index.

December lows around $65 dollars a barrel should provide support to oil markets, said Matt Maley, chief market strategist at Miller Tabak + Co.