01 December 2023
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OPEC+ agrees on voluntary production cuts from January 2024

By Khatija Haque

OPEC+ announced approximately 900k b/d of voluntary production cuts from January 2024, and Saudi Arabia will extend its voluntary production cut of 1mn b/d into next year as well. There was no press conference after the meeting, which had been delayed due to disagreement over quotas for next year and which was held online. Each member country has announced its own quotas for 2024, with Angola rejecting its target of 1.11mn b/d and indicating it will produce more. The UAE will make additional cuts of 160k b/d. Brazil has agreed to become in OPEC+ affiliate next year but won't be bound by the group's quotas. 

Preliminary inflation data for the Eurozone came in better than expected in November, with CPI declining -0.5% m/m and up 2.4% y/y. Core CPI also eased to 3.6% y/y from 4.2% in October. Some of the downside surprise was likely due to changes in the weightings of travel services in the CPI basket. Nevertheless, the data should allow the ECB to keep rates on hold for the time being, although as base effects and the unwinding of energy subsidies are expected to push up inflation in H1 2024, it is unlikely the ECB will cut rates in the near term.

In the US, personal income and spending both rose 0.2% m/m in October, in line with expectations. PCE inflation was zero m/m in October and 3.0% y/y, down from 3.4% in September. Core PCE inflation declined to 3.5% y/y from 3.7% in September and was in line with forecasts. Other data released yesterday was consistent with a slowing US economy: pending home sales fell -1.5% m/m and -6.6% y/y in October and continuing jobless claims continued to rise, reaching 1927k in the week to 25 November, the highest level since late 2021. 

China’s official manufacturing and services PMIs both came in lower than forecast in November at 49.4 and 50.2 respectively. The data was also slightly lower than in October. Manufacturing activity declined for the second month in a row, likely reflecting weak external demand for goods, while the services sector softened from October which had been boosted by Golden Week holiday travel. In contrast, China's Caixin manufacturing PMI (which covers smaller businesses) came in higher than expected at 50.7 in November, up from 49.5 in October.  

Saudi Arabia’s trade balance fell to SAR 100bn in Q3, down marginally from SAR 102bn in Q2 but sharply lower than the SAR 216bn recorded in Q3 2022. There was a 24.9% y/y decline in merchandise exports to SAR 299.8bn, from SAR 399.1bn in Q3 2022. This was driven by lower oil exports as both global oil prices and Saudi production headed lower, resulting in a 27.8% y/y decline to SAR 231.1bn. Non-oil exports, focused on chemical products and plastics, were down 13.0% y/y, or 19.2% if excluding re-exports. China remained the most important trade partner, with exports of SAR 49.0bn, or 16.4% of total exports, and imports of SAR 40.6bn, or 20.3% of the total. In terms of exports, China was followed by Japan, South Korea, India, UAE and US, while the US and the UAE were the second and third largest sources of imports. Imports were dominated by machinery, electronic equipment, and transport equipment and were up 9.4% y/y to SAR 200.0bn in Q3, (3.8% q/q), reflecting the heavy investment in diffuse projects ongoing in Saudi Arabia.    

Today’s Economic Data and Events

13:00 Eurozone manufacturing PMI (Nov final) forecast 43.8

13:30 UK manufacturing PMI (Nov final) forecast 46.7

19:00 US ISM manufacturing (Nov) forecast 47.8

Fixed Income

  • Comments by the Fed's Mary Daly and John Williams helped US treasury yields move higher on Thursday. Daly said it was "premature" to declare victory against inflation and Williams also indicated that it was too early to be thinking about rate cuts. The 10y benchmark yield rose 7bp to 4.33% while the 2y yield rose 3.5bp to 4.68%. 
  • 10y yields rose across the board in Europe yesterday also, although to varying degrees. Gilts rose 8bp to 4.1% while bunds rose just 1.5bp to 2.44%. 


  • The dollar gained on Thursday against a basket of six major peers. Although the move trimmed some of the losses seen over the course of the month, the dollar index remains over 3% lower in November. EURUSD dropped 0.74% to 1.0888 on the back of slower Eurozone inflation. GBPUSD declined 0.56% to 1.2624, while JPYUSD rose 0.65% to reach 148.2.
  • Moves in commodity currencies were more mixed against the dollar. AUSUSD fell 0.18% to 0.6605, and NZDUSD declined by a marginal 0.02% to 0.6155. CADUSD dropped 0.2% to 1.3561.


  • While US equities had a mixed day yesterday, November was one of the best months on record for US stocks. The Dow Jones Industrial Average rose to a 2023 high on Thursday, up 1.5%, while the S&P500 rose 0.4%. Tech stocks lagged with the Nasdaq Composite closing -0.2% lower yesterday. Year-to-date however, the Nasdaq Composite is up 36% with an 11% gain in November alone.
  • In Europe, the FTSE100 gained 0.4% while the EuroStoxx50 was up 0.3% yesterday.


  • The lack of clarity around the extent of OPEC+ production cuts from January 2024, and concerns about compliance from member countries, saw oil prices decline after an initial jump on the news of the additional cuts. Brent closed down 0.3% yesterday before the OPEC+ announcement but is trading -2.9% lower this morning at USD 80.4/b as of this writing. WTI closed -2.4% lower yesterday and is down a further -0.3% this morning at USD 75.7/b.



Written By

Khatija Haque Head of Research & Chief Economist

Jeanne Walters Senior Economist

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