Daily Agenda: IEA Says Oil Production Will Decline

Agency predicts oil surplus to fall as U.S. output shrinks; BoA results hit by trading woes; New York pension votes on cutting hedge fund exposure; Bank of England holds rates.


One day after the Organization of Petroleum Exporting Countries released a study predicting softening global demand for energy commodities, the International Energy Agency announced forecasts for production to fall as well, with a surplus of only 200,000 barrels per day in the second half of 2016. Cutbacks by North American shale producers combined with expectations that Iran’s output hike will be gradual underpinned the Paris-based organization’s arguments. Investors digested the release, coming just days before the OPEC/Russia summit over production caps, and a modest dollar rally in early trading sent oil prices lower in futures markets.

Bank of America trading results drag down profits. On Thursday, Charlotte-based Bank of America Corp. announced financial results for the firt three months of the year. The bank’s net profit of $0.21 per share represents a 13 percent year-over-year decline, roughly in line with consensus analyst estimates. Trading revenues declined by nearly 16 percent versus the same period in 2015.

NYC pension to cut hedge funds. Trustees for the New York City Employee Retirement System will conduct a vote today on maintaining the pension fund’s current allocation to alternative investments, a move spurred by a prolonged period of underperformance and high fees. If the fund, which oversees more than $50 billion, of which $1.4 is allocated to hedge fund managers, acts, it would be just the latest move by a public pension away from the asset class.

BOE holds rates, warns on Brexit. The Bank of England monetary policy committee statement release on Wednesday included no change in benchmark interest rates as many market forecasters had anticipated. Bank Governor Mark Carney and colleagues raised concerns that the looming referendum over European Union membership is already affecting some segments of the economy and indicated that the central bank intends to react to near-term data cautiously in the face of potential disruptions resulting if an exit occurs.

U.K. regulator seeks industry ban for UBS trader. On Thursday, the Financial Conduct Authority announced that it will seek a ruling barring Arif Hussein, the former head trader for UBS’s U.K. Libor trading group, from the financial industry for life. While the FCA imposed fines against the Swiss bank for rate manipulation, the regulator has leveled individual charges against Hussein that target his involvement both directly and in an oversight capacity.

Nestle beats estimates. Swiss food giant Nestle reported financial results for the first quarter on Thursday, beating consensus analyst forecasts with sales growth up nearly 4 percent year-over-year. The improved performance was driven in large part by strong results from the Vevey, Switzerland-based company’s coffee brands, a segment that has come under intense competitive pressure in recent years.