Good morning. U.S equities closed little changed from Wednesday yesterday with the Dow ending down 20 points at 17,049, the S&P 500 gained 2 to 1,997 and the Nasdaq up 5 to 4,592. And you should be very happy because for most of the day all the indexes were seriously bleeding with the Dow at one point down 85 points. It was only during the final two hours did stocks manage to claw their way back to unchanged. The most significant report yesterday was weekly jobless claims which rose more than economists were forecasting. The weak data moved the euro off its 14 month lows reached earlier this week. Yesterday’s market action continues to be what it’s been all week. Chatter.

What has become a central question for global markets right now is the timing of the expected rate hike by our Fed which meets next week. Although a hike is not expected until next year, the debate is now centering whether interest rates will rise in Q1 2015 or as late as Q3. There’s a lot of concern out there that no matter how much the Fed would like its normalization to be smooth and serene, it may end up being more harsh on the asset markets than previously anticipated.

Today additional sanctions go into effect on Russia. The EU added 15 companies, including the national oil and gas companies, and 24 people to the list of those affected by its sanctions. Under the new penalties the EU extended a ban on share and bond sales with a maturity of more than 30 days to the three Russian energy companies and three industrial producers. Additionally, nine defense companies are subject to a curb on imports of dual-use technology. In retaliation, Russia’s Economy Ministry drafted a list of goods that may be banned including automobile imports, textiles and clothing. The fighting in Ukraine has killed more than 3,000 people and driven more than 1 million from their homes.

This morning we’re starting out a little weaker with the Dow down 45. There was more action in the Asian equities but they ended mixed and the European markets are mimicking the action in the Asian markets

WTI finally found a bid rising $1.16 to $92.83. Brent however had no such luck climbing only 4¢ to $98.08. Note that spread is in to only $5.25. That spread was out to $28 a few years ago before the southern leg of the XL pipeline was built and Bakken crude was pouring into Cushing, OK, the Nymex contract delivery point. Members of OPEC are moving in opposite directions in response to falling oil prices. Saudi Arabia said on Wednesday it lowered production in August by 400,000 bpd but Iran, Nigeria and Kuwait reported they increased their production by 10,000 bpd, 152,000 bpd and 100,000 bpd, respectively. Then you have Libya where production in three months had grown fivefold to 800,000 bpd according to the country’s National Oil Company. Saudi Arabia is facing increased competition in Asia from a raft of rival producers. This summer the U.S. resumed oil exports for the first time since the 1970’s amid a shale oil boom with its first shipment going to South Korea. Iran is also selling more oil to China.

This morning WTI is quiet being down a meaningless 5¢.

Yesterday natural gas dropped a material 13.1 ¢ to $3.823. The impetus for the decline was a bearish EIA weekly storage report which showed the U.S. injected 92 Bcf last week with the market expecting 87 or 88 Bcf. I’ve often mentioned how the consumption of Maalox increases materially on Thursdays because of this report but I don’t’ think you really understand why. I’ll give you an example why. Look at the chart below. It’s yesterday’s price action for the October Nymex contract. The EIA released its report at 10:30 EDT, and you can see the market’s reaction. Literally over the next 60 seconds the market free fell about 10¢. This means there were no bids in the market immediately following the release of the report. If you were long, you were stuck. You couldn’t get out. You were between a dog and fire hydrant. And your market-to-market report just got uglier. Although yesterday’s price fall was material we’re still above the low this year of $3.72 which we hit in July and August.

Looking at the forecast, this week has and is going to be downright chilly for the upper Midwest and heaters will most definitely be kicking up on probably for the first time in months producing that weird first-time-kicked-on-in-months smell. The cold will quickly mitigate and see that 11-15 day forecast. You know what that means? No load in just about the entire country! Zero! The strong cash/no load future ying yang thing is going on this morning with natty down 0.3¢. Pure chatter. Have a good weekend.