What does yesterday meteoric spike in OVX mean for WTI?

We don't know yet. OVX shot up to 64.91 into yesterday's close. It is unclear whether this might be a glitch on CBOE's side, or whether it might be month-end or quarter-end related, but it was a meteoric jump.

To put the size of the move into context, very recently in Septmeber and November when we had similar spike, it came as a result of a 16% and 14% drop in WTI. Compared to yesterday where prices barely moved 2% from the close to the Asia-Pac lows.

The challenges at the Suez Canal might have led to an abnormal increase in implied volatility, but if that os the case it would be a major "over-reaction" on the options side of the market. The other possibility is that the recent drop in prices led to a surge hedging with holders of underlying oil longs potentially buying up downside protection.

Whatever the reason, it's too early to tell how this might affect prices. Usually, this type of move would suggest a push lower in prices, but WTI has remained very calm, for now at least. In the meantime, with the warnings of a potential messy month-end and quarter-end rebalancing for equities and fixed income, we do want to tread carefully here.