• WTI drops hard on technical selling and in risk-off markets.
• Institutions were dumping crude futures to limit their exposure to falling prices in the options market.

US crude prices ended the day down 5.2% at $68.20 a barrel, the lowest closing price since Dec. 3, 2021 and the largest one-day percentage decline in more than two months on a wave of technical selling.

Credit Suisse's 2022 annual report was published on Tuesday and it cited "material weaknesses" in its internal controls over financial reporting, noting that it had not yet stemmed customer outflows. This has provoked a flight to safety in financial markets, hurting the oil price.

Analysts at ANZ Bank said financial institutions were dumping crude futures to limit their exposure to falling prices in the options market. ´´This comes amid renewed fears of weakness in the physical market. The International Energy Agency warned that higher-than-expected Russia exports will keep the market in surplus for the first half of the year,´´ the analysts explained. ´´The Paris-based group highlighted that oil inventories have climbed to their highest levels in 18 months as demand growth remains subdued amid lingering fears of a recession.´´

Meanwhile, Russia Energy Ministry warned that its likely to lower its oil output in 2023, the analysts noted. ´´In the US, crude oil inventories jumped by 1.55mbbls last week. However, there were signs of stronger demand. Stockpiles of gasoline and distillate fell last week by 2,061kbbls and 2,537kbbls respectively.´´