Angola: Cabinda crude oil prices plummet in January; Angolan oil production edges down
February 17, 2020
The average price of Angola’s Cabinda crude fell to USD 65.8 per barrel (pb) in January, from USD 69.4 pb in December, after two consecutive months of rising prices. January’s price was 5.1% below the average price observed in the previous month, although it was 10.6% higher in year-on-year terms.
Fears of slumping global oil demand depressed global crude oil prices at the outset of the year, as the coronavirus outbreak has severely disrupted economic activity in China—the world’s largest crude oil importer. Significant disruptions to the manufacturing, transportation and construction sectors in the disease-stricken country dented Chinese demand for oil, while fears over its fallout to the rest of the world dampened the global growth outlook. On top of that, oversupply concerns due to the lack of action from OPEC+ further weighed on oil prices, although a dramatic downturn in Libyan output cushioned slumping Brent crude oil prices somewhat.
Oil production in Angola edged down to 1.38 million barrels per day in (mbpd) in the first month of the year, from 1.40 mbpd in December. Meanwhile, according to the latest OPEC report published on 13 February, crude oil production among OPEC countries dipped to 28.86 mbpd in January, from 29.37 mbpd in December, reflecting the implementation of December’s output cuts.
Looking forward, the global oil price outlook appears increasingly uncertain. The coronavirus outbreak threatens to significantly curb global demand for the black gold as the virus spreads and aftershocks from China’s economic downturn are felt more widely. On the other hand, OPEC+ production cuts and slowing U.S. oil output growth should somewhat alleviate supply pressures, thus supporting global crude prices. Meanwhile, uncertainty over global trade relations and the geopolitical situation in the Middle East remain factors to watch going forward.
Author: Almanas Stanapedis, Economist