Angola: Cabinda prices dip in April over the prior month, but skyrocket in annual terms
The price for Cabinda oil averaged USD 64.2 per barrel (pb) in April, down from 65.7 pb in the prior month. The print marked a 2.3% month-on-month decrease (March: +5.1% mom). Meanwhile, the average price skyrocketed in annual terms in April, jumping 356% (March +98.3% yoy), although this was partly due to a supportive base effect as the outset of the pandemic in spring last year weighed severely on prices.
Despite April’s dip in monthly terms, prices remained relatively high on the back of an improved demand outlook due to the global rollout of Covid-19 vaccines, which should facilitate the gradual removal of restrictive measures and thereby increase road usage. Turning to output, Angolan production rose to 1.18 million barrels per day (mbpd) in April from 1.16 mbpd in March, while OPEC+ production also increased amid greater output in Iran, Nigeria and Saudi Arabia.
Oil prices should average higher than last year in 2021 as global activity gains traction and stimulates demand for the black gold. That said, questions remain over the strength of the global recovery, as well as vaccine availability and efficacy. In terms of output, Angolan production should ease slightly this year compared to last year due to the effect of previous production cuts.
Analysts at the EIU added that while “reforms are facilitating commercial interest in Angola, […] it will take several years to reverse declining oil output”.
Despite the expected drop in oil production, the outlook for the economy has brightened due to higher oil prices, according to Gerrit van Rooyen, economist at Oxford Economics. He stated:
“Our growth outlook for 2021 has improved on the back of a rally in oil prices and better expectations for global trade. We forecast real GDP will finally recover—after five straight annual contractions—to show growth of 1.7% this year, from an estimated contraction of 5.5% in 2020. Nevertheless, we expect a moderate decline in domestic oil output, while continued coronavirus-related restrictions will weigh on the economic recovery.”