Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesoro (NYSE: TSO) are plunging today, down by as much as 10%, after the company updated its fourth-quarter guidance.

So what: The company expects to report a net loss between $0.55 and $0.80 per share, compared to the $0.65 profit analysts are looking for. Tesoro cited an extremely weak margin environment in California and the collapse of the West Texas Intermediate (WTI) to Brent crude oil spread.

Now what: The Tesoro Index for the California area was a negative $0.05 per barrel, down over $6 compared to the sequential and year-over-year prices. The WTI to Brent spread fell from $26 per barrel in September to just $8 per barrel in December. The decline reduces benchmark margins at Tesoro's refineries and the margin on long-haul foreign crude oil barrels indexed to WTI. When you're in the oil business, volatility is simply the name of the game.

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Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.