Oil Nearing Record Levels

The markets are weak in early trading on an earnings warning from UPS and rising oil prices.

Crude oil inventories declined 3.1 million barrels vs. expectations for a build of 2.3M barrels. This helped crude prices spike higher, currently nearing the $111 level.

Gold prices are also higher on dollar weakness vs. both the Yen and the Euro.

Asian markets were lower across the board overnight, led by a -5.5% plunge in China. China certainly hasn't had the type of bounce lately that many of the bulls were hoping for. It is starting to look like the bubble over there has burst.

UPS lowered is 1Q EPS outlook due to the challenging macro environment. This helped push bond yields lower, with the 10-year yield down to 3.52%.

Semis are bucking the early weakness and moving higher in early trading. SNDK looks like it may have finally bottomed. But it is energy stocks that are again leading the action.