World Bank raises oil price forecastStaff writer ▼ | April 27, 2016
The World Bank has increased its projection for the average price of an oil barrel this year.
Oil industry The upward revision by increased optimism
The bank explains the upward revision by increased optimism across markets and an expected decrease in oil oversupply.
It adds that the commodity’s price climbed from $25 by mid-January to $40 in April, in the wake of production issues in Iraq and Nigeria and declining output in countries that are not members of the Organization of Petroleum Exporting Countries (Opec), notably the United States and its oil shale.
“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply,” a press release quoted the World Bank senior economist and the report’s leading author John Baffes as saying.
He warns, however, that prices can drop again in case Opec member countries agree to increase output and non-members fail to reduce their own production as expected.
In spite of the higher oil price estimate, the World Bank believes the average prices of major commodities will fail to match 2015 levels this year, due to abundant availability and the low growth prospects in emerging and developing nations.
The prices of energy commodities (oil, gas and coal) should drop 19.3% on average. In January, a sharper, 24.7% drop over 2015 was expected.
Metal commodities prices are seen to drop 8.2%. Last January, the forecast had been 10.2% due to expectations of stronger demand from China.
Agricultural commodities may grow cheaper than the World Bank had expected in January, as a result of good grain and oilseed harvests and lower energy costs. ■