Angola: Cabinda crude oil prices rise in August, but outlook remains clouded
On average, Angola’s Cabinda crude oil sold at USD 45.4 per barrel (pb) in August, up from July’s USD 44.3 pb, as demand and supply conditions continued to improve. The average price in July was up 2.5% month-on-month; however, prices remained depressed by historical standards as they were still down 25.2% year-on-year.
The uptick in prices over the month has been driven robust private-sector activity amid the lifting of Covid-19-induced lockdowns and restrictive measures across the globe. However, the easing of the OPEC+ production cuts weighed on prices. Moreover, Angolan oil production rose to 1.18 million barrels per day (mbpd) in August from July’s over 15-year low of 1.14 mbpd. Crude oil production among all OPEC+ members, meanwhile increased to 24.0 mbpd in August, up from July’s 23.3 mbpd: Output continued to climb in Saudi Arabia, UAE, and Kuwait.
Prices have trended lower through mid-September likely due to increased supply amid frail demand, with renewed restrictions in some countries as new cases of Covid-19 remain elevated. Moreover, the balance of risks is tilted to the downside due to the easing of the OPEC+ production cut measures, a pick-up in U.S. shale production, the prospects of greater output in Libya, and lingering coronavirus uncertainty. Moreover, the strength of the post-pandemic recovery remains uncertain. Turning to output, Angolan crude production is forecast to decline this year and next as previous output cuts and weakened aggregate demand weigh on production.