Angola: Cabinda prices edge down in September
Angolan Cabinda oil sold at USD 41.0 per barrel (pb) on average in September, which is down from August’s six-month high of USD 45.4 pb and likely due to easing demand amid renewed restrictive measures in some parts of the world as new Covid-19 cases have been on the up. Moreover, the average price in September was down 9.7% month-on-month and remained severely depressed by historical standards as they were down a whopping 36.5% year-on-year.
The downtick in prices was also due to an uptick in global supply levels amid greater production in Libya, on top of the effect of the recent easing of the OPEC+ production cut deal. While Angolan oil output in September matched August’s 1.18 million barrels per day (mbpd), total OPEC output inched down to 24.1 mbpd in September from 24.2 mbpd. This was chiefly due to a large drop in production in UAE, while output rose in nearly all other member countries.
Looking ahead, prices have been fluctuating around their current level as demand has been muted by new Covid-19 containment measures due to a second wave of infections. Moreover, the price outlook remains fragile and the balance of risks tilted to the downside amid a pick-up in U.S. shale production and greater production in Libya while Covid-19 uncertainty lingers. However, prices should rise next year on a recovering global economy driving up demand. That said, questions of the strength of the post-pandemic recovery remain as well as geopolitical tensions amid the upcoming U.S. elections.
Turning to output, Angolan production is forecast to decline this year and next as previous output cuts and weakened aggregate demand weigh on output.