Angola: Both Cabinda crude oil prices and Angolan oil production jump to seven-month highs in December
January 17, 2020
The average price of Angola’s Cabinda crude rose to USD 69.4 per barrel (pb) in December, from USD 64.7 pb in November. This marked the second consecutive monthly increase and the highest price since May. December’s price was 7.2% above the average price observed in the previous month and a whopping 22.4% higher in year-on-year terms.
In December global oil prices were supported by an extension to the OPEC+ production cut agreement at the beginning of the month as well as cautious optimism over the demand outlook for crude following the announcement of the now-signed “phase one” trade deal between China and the U.S. on 13 December. Somewhat healthier than expected end of year growth dynamics in China and the U.S. and falling inventories in the United States added further upside pressure to oil prices.
Oil production in Angola increased to a seven-month high of 1.43 million barrels per day in (mbpd) in December, from 1.30 mbpd in November, which had marked the lowest output since June 2006. Meanwhile, according to the latest OPEC report published on 15 January, crude oil production among OPEC countries edged down to 29.44 mbpd in December from 29.61 mbpd in November, reflecting the implementation of deeper output cuts.
Looking forward, the outlook for oil prices remains highly volatile. That said, an extension of the OPEC+ oil cut deal should keep global output in check, largely offsetting robust production in the U.S. In addition, crude oil prices should be further supported by easing concerns over softening global growth. Geopolitical concerns and lingering uncertainty over ongoing trade negotiations between China and the U.S. remain major risks to the outlook.
Author: Almanas Stanapedis, Economist