Angola Commodities January 2021

Angola: Cabinda prices rise to over one-year high in February

Angola’s Cabinda oil sold at USD 62.5 per barrel (pb) on average in February, which was up from January’s USD 55.4 pb. The increase marked a 12.9% month-on-month rise (January: +8.4% mom). Moreover, prices were up 9.1% year-on-year in February, marking the first annual price increase since January 2020.

February’s average price marked a 13-month high as the demand outlook continued to improve amid the rollout of Covid-19 vaccination programs, which should boost road usage ahead. OPEC+ output, meanwhile, eased in the month due to a notable scaling back of output in Saudi Arabia, which more than offset increased production elsewhere. Angolan output, however, dropped to 1.18 million barrels per day (mbpd) in February from 1.22 mbpd in January.

This This year, prices should average higher than last year on the back of the global economic recovery, spurring demand for oil. That said, uncertainty remains over the strength of the post-pandemic recovery amid questions regarding vaccine availability and effective rollouts. Turning to output, Angolan production is set to ease slightly this year compared to last year, owing to the effect of previous production cuts.

The general economic outlook for the country remains fragile amid overreliance on the oil sector, with analysts at the EIU commenting:

“Low oil prices and declining output volumes weigh on government and export revenue, and economic opportunities for many are limited given a sustained recession. The reform agenda under the current IMF programme is making progress, but barriers to diversification away from oil are significant, and protests are common as dissatisfaction with the government grows-“

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