This content is from: Portfolio

Daily Agenda: Crude Slides on Supply Glut

Oil markets react to record supplies despite production caps; S&P warns on possible China downgrade; MetLife escapes Sifi designation and GE makes a similar request.

Futures contracts for crude oil declined in trading in the U.S. and U.K. this morning as investors ponder mixed fundamental data for energy markets. The Energy Information Administration weekly supply report released on Wednesday indicated the seventh consecutive expansion for stockpiles at 535 million barrels — higher than consensus estimates among analysts. Despite a rally of more than 10 percent from year-to-date lows for front-month delivery contracts, there are signs that oil markets may come under pressure again as global supply levels remain robust despite moves by some major producers to cap output. In a potentially positive development for global demand, state-run media quoted an executive with Unipec, a subsidiary of Chinese oil company Sinopec, that china will supersede the U.S. as the largest global importer in 2016.

S&P warns over possible China downgrade. On Thursday, New York credit-rating agency Standard & Poor’s revised its outlook for Chinese sovereign debt, warning of a possible downgrade. The announcement comes as a sluggish response to Beijing’s policy interventions sparks fears that gross-domestic-product targets may be lowered again.

MetLife decision spurs questions over Dodd-Frank enforcement. A ruling on Wednesday in the U.S. District Court for the District of Columbia agreed with MetLife that the insurer should not be subject to higher regulatory standards as a systemically important financial institution (Sifi)under the Dodd-Frank Act. In defeating the arguments of the Treasury Department, MetLife will avoid additional levels of oversight and increased capital requirements. Critics of the 2010 legislation enacted in the wake of the financial crisis have argued that the requirements stipulated are vaguely defined and arbitrary.

GE seeks release from financial regulation. General Electric announced on Thursday that it has asked the Financial Stability Oversight Council to be removed from oversight by the Treasury Department. The conglomerate, which has shed assets globally in recent years, argues that it has sufficiently retreated from financial services to no longer be treated as a systemically important financial institution.

Court deals blow to Zuma. The highest court in South Africa on Thursday ruled that the nation’s president, Jacob Zuma, violated the constitution when he used taxpayer funds for personal expenses. In finding that as much as $15 million should be repaid to South Africa, the court’s judgment is a setback for Zuma as he faces a more serious scandal relating to allegations of corruption within the ruling African National Congress.

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