Good morning. After hitting new highs on Tuesday U.S. equities slipped back yesterday but the damage was extremely minor. The Dow lost 2 to 17,686, the S&P 500 ended down 3 to 2,049 while the Nasdaq fared much worse shedding 27 points to 4,676. Not bad considering the S&P has hit 8 record highs and the Dow 7 all in just this month. Powering the move is 3rd quarter corporate earnings which have been better than expected and up 8.1% compared to Q3 2013.

The Commerce Department released housing start data for October yesterday noting they were down 2.98% from September. The Street immediately took this as negative but drilling down in the data it was the volatile multi-family unit starts which were way down, 15.4%. Single family home starts were actually up month-on-month, 4.2%. Additionally, building permits were up 4.8% so the report was not nearly as bad as initially thought.

The other big event of the day was the release of the minutes of the Fed’s October 28-29 meeting. Now that the Fed’s bond buying program is over all eyes are focusing on the future of interest rates, specifically, when they’re going go up. The key words are “considerable time” and investors are looking for the inclusion or exclusion of those two words in the minutes with reference to how long interest rates will remain low. And they were in these minutes. Fed officials are cogent how these couple of words are to the market. The minutes indicated the members of the committee are very aware of the economic risks in China, Europe and Japan with growth in the economies of former two flat lined and in the latter officially in a recession.

This morning is starting out really lousy for equities. Although Asian shares closed mixed (seems like I say that a lot!) European stocks are getting whacked. Reports this morning show Eurozone Manufacturing PMI ticked down to 50.4 from 50.6 with expectations of 50.9. Also, the Services PMI fell to 51.3 from 52.3 with the consensus the latter number. Data from the important countries of Germany and France drug these numbers lower. We’re still above “50” for both of those numbers so that’s good, but we’re moving in the wrong direction.

As so often is the case early in the morning traders and investors are looking internationally for direction and that direction is down with Dow futures off 90. There’s a lot of economic data today so let’s see how the day progresses.

It was another exciting day in the natural gas market. A private forecasting service (the one we and the entire natural gas market subscribes to!) released their forecast for December and January and folks, it was downright cold for the Midwest and east. Now I’m not saying “Polar Vortex” but you can leave the golf clubs in the closet! However, California will continue to see above normal temperatures and unfortunately, no relief to its severe drought. Maybe you should plan out west to visit Mickey Mouse in January! This forecast sent natty screaming with the December contract closing 12.7¢ higher at $4.371.

Courtesy of MDA Information Systems LLC

Today is Thursday and we all know that means natural gas storage report day. Market expectations are for the first withdrawal of the season, 7 Bcf. The weather forecast this morning is pretty much the same as yesterday, which is supportive of natty. Temperatures in the 6-10 time frame will be 8-15 degrees below normal and although moderating in the 11-15 time frame, it will still be below normal. Add to this short term forecast the forecast for December and January and it looks like the next 2 ½ months are going to have above normal HDD’s which will always push prices higher, which it did yesterday. Strictly on the weather, natural gas prices are up about 84¢, 24%, from just 3 weeks ago.

This morning traders are waiting on the storage report with natty trading up 2.7¢. More excitement is in store come 9:30 CST when the storage report is released.

WTI ended pretty much unchanged down a meaningless 3¢ at $74.58. Brent didn’t fare as well losing 37¢ closing at $78.10. Brent’s really feeling the pressure on the recent report the Saudi’s increased production in September despite signs of an oversupplied market. Add to that rumors that Saudi officials have stated in private meetings the kingdom could live for some time with current, or even lower(!) prices and the bids are scurrying. No question the OPEC meeting a week from today is going to get more attention than usual. Because of the meeting I think traders are reluctant to sell oil lower right now. However, if the OPEC meeting ends with nothing coming from the members in support of prices we’re going lower. As I mentioned above, Japan is officially in a recession, new evidence this morning that China (HSBC purchasing manager’s report) coming in below expectations and Europe “flat lining” in conjunction with growing U.S., Iraqi and Libyan supplies are not bullish fundamentals.

Also, making the bulls yoke heavier and heavier is the U.S. dollar which continues to strengthen against foreign currencies. Yesterday the greenback hit another 7 year high vs. the yen. As I mentioned, Japan is in a recession so what does a central banker do to help his country get out of a recession? Print money!

Today the December Nymex WTI contract expires and we’re getting some short covering with the price up 28¢.

And finally, I’ve talked a lot over the past year about rising oil production here in the U.S.. The graph below says it all. And this is only for Texas!