West Texas Intermediate crude-oil futures contracts for front-month delivery declined by nearly 2 percent in early trading on Wednesday, extending a string of losing sessions stretching back to last Friday. The pullback followed in the wake of announcements that Nigerian rebels in the Niger Delta are approaching the negotiating table, potentially ending production interruptions in the region. Separately, Baker Hughes rig-count data for the U.S. released yesterday rose for the second consecutive week. Other contributing bearish factors include Iranian production continuing to expand after the removal of Western sanctions and political chaos in Venezuela that may compel the government to compromise with the U.S. on trade. Critically, inventory data released by the American Petroleum Institute indicated that total U.S. crude inventories expanded by more than a million barrels during the week ending on June 10, versus forecasts for a decline of 2.3 million. As investors focus on today’s Federal Reserve announcement and the June 23 Brexit referendum in Britain, the perception that oil’s year-to-date rally may have peaked is weighing on sentiment across equity markets globally.
U.K. unemployment drops. The U.K. Office for National Statistics released unemployment data that revealed an improvement during the three months ending in April, with the headline rate falling to 5 percent versus consensus forecasts of 5.1 percent. Wages expanded by an annualized 2.3 percent during the period. The monetary policy committee of the Bank of England will meet tomorrow for its monthly rate announcement. Analysts do not expect a shift in policy as improving labor conditions are offset by risks associated with next week’s Brexit vote.
House Republicans attempt to censure IRS chief. The House Oversight and Government Reform Committee will vote today on a resolution to censure Internal Revenue Service Commissioner John Koskinen. Republican members of Congress have charged that Koskinen blocked investigations into claims that the IRS targeted conservative political groups. Next week the House Judiciary Committee will vote on beginning an impeachment process against Koskinen.
MSCI snubs Shanghai. Yesterday MSCI released a statement that confirmed that Chinese equities will not be added to the company’s widely followed emerging-markets index as concerns over transparency in the domestic Chinese markets outweigh demand for access. According to MSCI, time will be required to ensures that foreign allocation quotas and trading limits provide international investors with sufficient liquidity.
PBOC data shows surge in new loans. Data from the People’s Bank of China released on Wednesday included a nearly $150 billion increase in renminbi-denominated loans in May, almost twice the consensus economist forecast. The data point is potentially contentious after many critics, including the International Monetary Fund, recently warned about a looming Chinese credit bubble.
