Good morning. After a couple of lousy days we got a nice bounce yesterday with the Dow closing up 55 points at 17,068, the S&P 500 rising 7 to 1,996 (still below 2,000) and the Nasdaq climbing 34 to 4,587. Stepping back though and looking at the forest and not the trees, the market has just been chattering around after hitting new highs last week. As I like to say, bivouacking. I guess folks had to sleep on Apple’s announcement on Tuesday because yesterday it rose 3.1%, its biggest gain since April. I don’t usually mention individual stocks but Apple needs to be singled out because of its influence on the major indices being it’s the largest component of not only the S&P 500 but also the Nasdaq composite. It’s 8.5% of the latter. By the way, it’s up 26% for the year. There were no economic reports released yesterday that impacted the equity markets.

Overnight the Asian markets closed mixed with the Nikkei 225 rallying but the Hang Seng and Shanghai Composite both closing marginally lower with the Hang Seng closing lower for the 5th consecutive session. European equities are mimicking the Asian markets with all the major bourses across the pond getting whacked and also heading for their fifth consecutive loss. The Europeans are still digesting what increased sanctions will mean to Russia, and more specifically their economies, concluding the results will be negative for their GDP. We’re not faring any better here locally with Dow futures down 75. Really not much more to say here until we get some economic reports of significance or some geopolitical announcement or event moves the markets.

What can you say about oil other than it’s a bull’s nightmare. Yesterday WTI fell $1.08 closing at $91.67 and Brent was off $1.12 to $98.04. Like Asian equities, this was the 5th consecutive day of lower closes. WTI hit an 8 month low and Brent hit a 17 month low. And what most of you don’t know (my E&P clients sure do) is that a lot of oil producers are taking discounts off the WTI posting to sell their crude. For example, in the Permian Basin in West Texas many producers are having to sell their oil for about $12 less than Nymex WTI. That means they’re receiving less than $80/bbl. Now their netback is still above the magic $70/bbl but from their perspective prices are moving the wrong way. Yesterday the IEA (not our EIA) cut its 2014 oil demand forecast by 65,000 b/d and its 2015 forecast by 100,000 bpd. And if that wasn’t bad enough for the bulls, OPEC came out yesterday saying that demand for its oil in 2015 will drop to levels not seen since the global financial crisis in 2009 primarily due to rising production here in the U.S. And let us not forget what’s hurting not only oil but all commodities priced in the “greenback” and that is the strength in the U.S. dollar with it hitting a 6 year high vs. the yen. Corn, soybeans and wheat are at new lows for their respective futures contract. Of course impacting the latter are also fundamentals with record crops expected for corn and soybeans. And the strong dollar is just adding to the pain for all producers. This morning WTI continues to slide being down 85¢. I still wonder if the move down in oil prices is some grand concerted behind closed doors agreement of the West and Saudi Arabia to punish Vladimir Putin. I’m have absolutely no evidence of this. It’s just my imaginative mind running amuck.

After rising for the first two days of the week natural gas pretty much took the day off falling 3¢ to $3.954. The cash market is getting a boost this week with anomalously cold weather this week in the Midcontinent. Further north, the Canadian prairies are already seeing snow! Sure wouldn’t mind a touch of that here in Houston. We’re going to have a heat index over 100 today! It’s Thursday and you regular readers know that means its EIA natural gas storage day. The market is expecting an injection of 88 Bcf. This compares to an injection last year for this week of 64 Bcf and the five year average of 60 Bcf. This morning traders are starting the day pushing natty 7.0¢ lower.

As I’m sure you are well aware, today is the 13th anniversary of the horrific attack on America when almost 3,000 people lost their lives including 343 firefighters and 72 law enforcement officers. I knew someone who lost her life in the World Trade Center. Please take a moment out of your day and think of them. Thank you.