Good morning. U.S. equities fell for the 3rd straight day with the Dow losing 117 points, 0.68%, to 17,056, the S&P 500 dropping 12, 0.58%, to 1,983 and the Nasdaq off 19, 0.42%, at 4,509. Nearly half of the losses came in the last 20 minutes of trading which is not a good omen. It could have been worse though. All the European bourses got whacked averaging a loss of 1.3%, their biggest loss in more than 2 months, with France’s CAC taking a huge hit of 1.9%. That’s a lot in one day folks. Equal to a 325 point loss in the Dow. Multiple European negative reports were released yesterday. Factory growth in Germany hit a 15 month low, manufacturing growth in the eurozone hit its worst level in 14 months, eurozone services PMI marked a 3 month low and manufacturing and services contracted this month in France. It doesn’t take a rocket scientist to conclude that’ll bring in the selling. Here in the U.S. the economic data was modestly better, and I mean very modestly, showing Manufacturing PMI to be unchanged from August although it is still at a 4.5 year high. Clearly not a ringing endorsement of the economy but more evidence the economy is tepidly strengthening.

The Asian markets overnight closed mixed and European market all trading green as I write, but barely. Here in the U.S. Dow futures are up 46 points. Let’s call it a bounce from 3 days of losses. Hopefully not a dead cat one. News today out of Germany isn’t helping us with a report stating German business sentiment dropped for a 5th straight month in September to its lowest level since April 2013. The ECB is trying to do their part to support the economy. Mr. Draghi came out once again today saying the ECB will keep an accommodative monetary policy for as long as it takes to push ultra-low inflation in the eurozone back up closer to 2% taking some of the sting away caused by the bad economic data.

The two major oil indexes moved in opposite directions yesterday with WTI rising 69¢ to $91.56 while Brent fell 12 to $96.85. Oil had been falling but got a bounce yesterday on an increase in fear premium due to the air strikes by the U.S. and its allies on terrorists locations in Syria.

Producers in the Permian Basin have not been happy lately. Their price at the well head has fallen to a record difference of $17.50 discount to prices at Cushing, OK, i.e., the Nymex contract price. Increasing production, a series of refinery outages and a lag in new pipeline capacity has created a glut in the region. Help is soon coming though with one major pipeline expansion slated to be in service within a month and another in early 2015. Oil is benign this morning up a meaningless 6¢.

I’ve been mentioning lately that oil is under pressure with global demand flat and global production growing. Well below is evidence of the latter. Crude oil output from OPEC has been flat since 1995 but non-OPEC production has rising steadily and very materially in that same time frame. This obviously has an impact on price but also has huge political implications reducing OPEC’s control and influence.

Natural gas continues its choppy ways with the October contract closing down 3.4¢ yesterday at $3.816. For now natty is stuck in trench warfare waffling around the magic $3.90 number waiting for the next drivers which in the short term will be the EIA storage report tomorrow and in the longer term how the winter plays out. Regarding the latter, multiple forecasters have predicting a colder than normal Midwest this winter which is definitely making traders play the winter from the long side. What isn’t driving natty prices higher are hurricanes. What a benign season! The statistical peak was September 10th and although the end of the season is officially October 31st the probability of a hurricane after September 30th is small.

This morning the forecast is pretty much unchanged from yesterday although it does appear a cold air mass is traversing its way across the U.S over the 6-15 day period. I expect the 11-15 day forecast on Friday to show this event to be in the east. This morning chop continues with natty up 1.4¢. By the way, the October Nymex contract expires in 2 days. Have a good day.