Angola: Cabinda prices rise in September
Cabinda oil prices came in at USD 74.5 per barrel (pb) on average in September, up from USD 70.9 pb in August. September’s rise marked a 5.1% increase over the prior month and an 81.8% jump over the same month last year. The annual improvement, however, benefited from a favorable base effect.
The month-on-month price rally came on the back of firming demand for the black gold and weakened global supply levels, with the fallout from Hurricane Ida—which hit the Gulf Coast in late August and early September—impacting U.S. inventories. Moreover, skyrocketing gas prices have seen demand diverted towards oil as a more affordable alternative. Turning to output, production of Angolan Cabinda oil fell to 1.08 million barrels per day (mbpd) in September from 1.10 mbpd in August. Among other OPEC+ members, output declined in Libya and Venezuela, but rose markedly in Iraq, Nigeria and Saudi Arabia.
Moving forward, prices for crude oil have continued to rise midway through October, amid solid supply and demand fundamentals. Regarding output, production of Cabinda oil is expected to pick up slightly next year on the back of softer OPEC+ curbs. However, the impact of previous cuts and last year’s oil price slump will keep output relatively low.
Analysts at the EIU commented:
“Following the sharp drop in oil prices in 2020 at the onset of the pandemic, many energy majors halted exploration and drilling activity as they sought to cut operational costs. With the rebound in oil prices this year, some activity has resumed. The government has stated that there are currently eight rigs in operation in Angola’s offshore fields, up from just three in 2020, and it aims to have 14 by end-2022. However, it will take time for increased exploration activity to translate into higher output and reverse the current trend of falling volumes.”