Image Source: DepositPhotosIt’s melting. Global commodity markets are melting down despite cold weather and increasing geopolitical risk because of a sudden concern about a global economic slowdown starting the New Year.The recent bout of selling was caused in part by the fact that Saudi Arabia lowered their official selling price for oil to all markets, is raising concerns about global demand. While it is possible that the price reduction was to maintain market share in the face of production cuts, the market is taking it as a clear sign that the economy is slowing. Maybe the landing might not be so soft.MarketWatch reported that Saudi Aramco on Sunday said it would cut crude prices to all regions, including its largest market in Asia. In a notice, state producer Aramco 2222, +0.30% said February prices for various grades of Saudi crude, including its flagship Arab light, in Asia would fall $2 a barrel versus the Oman/Dubai regional benchmark from their January levels. Aramco said that the premium for Saudi crude versus the ASCI index, a benchmark for Gulf Coast sour crudes, will also fall $2 a barrel from January. Prices in northwest Europe and the Mediterranean will be down $1.50 to $2 a barrel versus the ICE Brent crude benchmark versus January prices.This comes as Bloomberg News reports that, “Money managers made one of their biggest bearish shifts on oil prices in years around the start of 2024. Speculators added about 61,000 combined-short positions in Brent and West Texas Intermediate crude in the week of Jan. 2, according to Intercontinental Exchange Inc. and Commodity Futures Trading Commission data. That’s the most since March and the second-largest increase since 2017.”The market seems to feel that geopolitical risk will not impact supply and if it does, demand is weak so it will not matter. The AP is reporting, “Hezbollah has struck an air traffic control base in northern Israel, the Israeli military said Sunday, and warned of “another war” with the Iran-backed militant group. The increase in fighting across the border with Lebanon as Israel battles Hamas militants in Gaza gave new urgency to U.S. diplomatic efforts as Secretary of State Antony Blinken prepared to visit Israel on his latest Mideast tour. “This is a conflict that could easily metastasize, causing even more insecurity and even more suffering,” Blinken told reporters after talks in Qatar, a key mediator.On the flip side of that, we’re starting to see natural gas get a bid even though we have natural gas supplies above average, different weather forecasters are calling for an Arctic blast that could drive temperatures as much as 50 to 78° below 0! One weather forecaster is predicting the coldest winter blast in over 100 years. And even though supplies of natural gas are 18.9% above year-ago levels and 13% above the five-year average this could still cause a price spike.If we do get this type of temperature drop and the production does get shut in and the demand goes through the roof, the market isn’t prepared for this type of weather situation. If it comes to fruition you have to be on guard for a major price spike. You might want to try to pick up some calls, out of the money, just in case. Fox Weather is reporting that, “Another powerful storm is bringing snow, flooding, and severe weather to parts of the U.S. this week. Blizzard conditions should hit the plains, as severe storms, flooding, and power outages are all possible from the South through the Northeast.More By This Author:The Energy Report: Running Into The New Year The Energy Report: Oil New Year The Energy Report: Departing The Red Sea