Important Notice: The next Morning Energy Blog will be posted on Thursday November 13, 2014.

Good morning. In a volatile session U.S. equities edged higher yesterday with the Dow rising 70 points to 17,555, the S&P 500 up 8 to 2,031 and the Nasdaq closing 18 points higher at 4,638. Ding, ding, ding! The Dow and S&P once again closed at record highs. Domestic equities got some “love” from European equities which closed higher (0.5%) on ECB President Mario Draghi’s comments after the central bank’s meeting indicating he’s ready to release additional measures (central bank speak for QE) in the euro zone to bolster the economy there. On the announcement the euro stumbled to a 2 year low against the greenback hurting commodity prices (you know where I’m going with that!). The ECB’s announcement pushed the U.S. dollar to its highest level since June 2010 against a basket of major currencies. Looks like it might be time to plan that trip to Europe. Better yet, Japan with the yen hitting a 7 year low!

This morning once again Asian markets closed mixed with it seeming the Hang Seng and Shanghai continue to move conversely to the Nikkei. Europe’s major indexes are currently trading on either side of unchanged. This is the first Friday of the month which means the Labor Department releases its Employment Situation Report which ever since the beginning of the Great Recession has been THE report. The report stated employers added 214,000 jobs in October. This was good news and bad news. The bad news is economists were expecting non-farm payrolls to increase by 240,000. The good news is that 1) employers have added at least 200,000 jobs for 9 straight months and 2) August’s and September’s job numbers were revised higher and you regular readers know how much importance I put on revisions for in good times revisions are for the better and in bad times the opposite. The unemployment rate dropped to 5.8% from 5.9% which is the lowest rate since July 2008. A very key statistic that the Fed focuses on for inflationary signals is average hourly pay (AVP) and it is still weak. AVP rose 3¢ in October to $24.57. This is just 2% higher than the AVP 12 months earlier and is barely ahead of the 1.7% inflation rate. Indeed the labor market is improving but the employee still has virtually no bargaining power. Investors and traders are not impressed with the report for the Dow is down 26 points this morning.

Ample supply and the strong U.S. dollar are bad enough for the oil bulls but add in China’s report that its service sector growth weakened in October and it’s down ya go. Yesterday WTI lost 77¢ to $77.91 while Brent managed to “only” lose 9¢ to $82.86. Brent is down nearly 30% from its high in June and is near a four year low. This morning oil is bouncing up $0.83 because our ex-KGB “friend” may be up to his old tricks. Unconfirmed reports are that a Russian military convoy has entered Ukraine. This falls under my category mentioned earlier this week of “geopolitical events.” Mr. Putin is getting squeezed and may be like a raccoon backed into a corner (I don’t know if you’ve ever come across one of these varmints but you don’t want to mess with them. They have sharp claws, sharp teeth and are downright mean!) So how do I know Mr. Putin is “feel’n it?” Because the Russian ruble is down nearly 34% in just 3 months! Folks, if a currency moves 5% over the course of a year it’s a big move in the Fx market. The ruble’s move is monumental! The lower price of oil and sanctions are indeed having a detrimental effect. Russia’s central bank reserves have fallen for the 11th week in a row and last week’s decline was the largest weekly decline since last spring. And this comes after the bank said it was suspending operations to support the ruble. Now for the record Russia’s reserves were large prior to the “invasion” of Ukraine and her credit rating was vaunted only a short while ago. That being said I’m sure the credit agencies are “running their numbers.”

Courtesy of MDA Information Systems LLC

The EIA released its weekly natural gas storage report showing 91 Bcf was injected last week which compares to last year’s 35 Bcf last year and the 5 year average of 42 Bcf. Inventories are now 6.2% below last year and 6.9% below the 5 year average. The expectation was for an injection of 87 Bcf and the market immediately sold off. And then everyone revisited the weather forecast and said “buy it!” and natty proceeded to run closing up 21¢ on the day at $4.404. Here’s some amazing data for you. Last Monday, 10/27, natty traded the low of the year at $3.541. Only 8 trading sessions later, yesterday, natural gas traded a high of $4.457. That’s up $0.916, or 26%! I’m going to say it again, you (or I!) must continually be watching the market for if you begin the supply renewal process when you see the opportunity, you will miss the opportunity.

The weather forecast again came in colder this morning but natty is trading down 4.2¢. I guarantee you this is traders taking profits ahead of the weekend. Have a nice weekend.