Angola Commodities June 2019

Angola: Cabinda crude oil price slumps; Angolan production remains weak in June

The average price of Angola’s Cabinda crude fell from USD 72.4 per barrel (pb) in May to USD 65.5 pb in June. June’s price was 9.6% below the average price observed in the previous month and 11.2% lower in year-on-year terms.

Oil prices were influenced by diverging forces throughout June. Rising fears of a global economic slowdown and the ongoing trade spat between China and the U.S. hurt oil demand expectations in early June. In addition, the U.S. continued to post new oil production highs supported by its booming shale industry. On the other hand, supply-side developments limited the price slump somewhat. OPEC+ oil production cuts, tumbling output in Venezuela, elevated fears of supply disruptions in Libya and Nigeria, and U.S. sanctions against Iran’s oil industry pointed to a tightening global oil supply outlook.

Oil production in Angola ticked up to 1.48 million barrels per day (mbpd) in June, from 1.45 million in May. Despite improving for a second consecutive month, oil production remained close to April’s over a decade low. Meanwhile, according to the latest OPEC report published on 11 July, crude oil production among OPEC countries moderated from 29.90 mbpd in May to 29.83 in June.

Looking forward, the outlook for oil prices remains somewhat uncertain, although prices are seen rising slightly towards the end of this year thanks to the decision by OPEC+ to extend oil production cuts until end-March 2020 and as the relationship between China and the U.S. improves following the meeting between Presidents Donald Trump and Xi Jinping at the June G20 summit. That said, volatility in prices is expected amid ongoing global economic and geopolitical developments.

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