The Day at a Glance | December 5 2022

*OPEC+ decided to maintain crude oil production quotas unchanged in light of high uncertainty in the energy market.

*China reduced COVID-19 testing requirements in several cities.

*Inflation will return to 2% by the end of 2024 or 2025; it`s not an estimate, it`s a commitment: Francois Villeroy, member of the ECB.

*Consumer confidence increased in Mexico during November (41.7).

*BIS warns of 80 trillion dollar unregistered debt in pension funds and non-financial entities in the form of FX Swaps.

*The EU will consider going to WTO over US subsidies for the development of technology and green energy.

*G7 agrees on Russian oil price cap at $60 dollars per barrel.

*The US services ISM is expected to be revealed (53.3e.).

Economic environment

OPEC+. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to maintain production quotas unchanged among its members in light of persistent uncertainty in the oil market. OPEC+ announced a 2M daily barrel production cut last month and decided to maintain the quota unchanged for the next few months due to the unpredictability of demand as China`s reopening occurs and new sanctions on Russia are carried out. Ministers of the organization decided to maintain production unchanged until there is more clarity regarding market trends, after China starts to ease COVID-19 restrictions, which points towards a possible rebound in demand as the world`s number one crude oil importer shows an upturn. On the other hand, this week brought a $60 dollar per barrel price cap on Russian oil  on behalf of the G-7, through a mechanism that will be revised every two months. Both events represent risks and bring fundamental changes to the oil market, which have forced OPEC+ members to pause their decision to cut production until the effects of these events on the energy market can be fully understood. OPEC+ suspended its monthly meetings until the end of this year and the next meeting is scheduled to take place in June of 2023, which is why no changes in production policies will be made in the next 6 months. Nevertheless, the Joint Monitoring Committee will meet in February and could call for an extraordinary meeting in case necessary. The price of oil increased this morning – along with other raw materials – in light of China`s reopening efforts.

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