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Crude oil prices have not looked back much since the start of the day. At the time of writing, both contracts were nearly 7% worse off on the session, weighed down by at least three major factors: 1) general risk-off sentiment, 2) weaker demand projections for oil, and 3) technical selling.

Unless oil prices stage a remarkable recovery somehow, this would be one of their largest falls in recent memory. WTI, for one, was seeing its largest one-day decline in 6 months. On the week, oil prices have fallen around 12% thus far. This sort of a sell-off was going to come at some point anyway. Prices had been stuck inside a corridor for a long time – since early December to be exact. The fact that we have now had a bearish fundamental trigger – a sharp rise in financial stability risks – to move prices outside of their ranges to the downside, meant that technical traders have also helped to add pressure on prices by selling oil futures short to take advantage of the momentum.

The selling has been triggered by the collapse of those two US banks – SVB and Signature Bank – and troubles at one of the largest banks in Europe – Credit Suisse, which was the root cause of today’s big moves in bank stocks.

The impact of very high levels of inflation over the past couple of years has been hurting consumption, while the significant interest rate tightening by central banks have further reduced consumer and business buying power. Indeed, the International Energy Agency is forecasting that global oil supply will “comfortably” exceed demand in the first half of this year.

All this begs the question: will the OPEC step in to save oil prices again by cutting its production?

The balls in their court now, but for now, thanks to the big breakdown, the path of least resistance is clearly to the downside for oil. Granted, we might see an oversold bounce in prices soon. But until something changes fundamentally to create a higher high for oil, we would continue to favor selling into resistance than fading the dips.

The next potential big downside targets for WTI are around $65 and then $60. The old support at $70-$71 area is now the most important resistance going forward. For as long as oil prices remain below that region, the sellers will remain in control.

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