Amid improving market sentiment and a weakening dollar, the World Bank has raised its 2016 forecast for crude oil prices to $41 per barrel from $37 in its latest Commodity Markets Outlook, as an oversupply in markets is expected to recede.
According to information from the World Bank, the crude oil market rebounded from a low of $25 per barrel in mid-January to $40 per barrel in April following production disruptions in Iraq and Nigeria and a decline in non-Organisation of the Petroleum Exporting Countries production, mainly US shale. A proposed production freeze by major producers failed to materialize at a meeting in mid-April.
“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply,” said John Baffes, senior economist and lead author of the Commodities Markets Outlook. “Still, energy prices could fall further if Opec increases production significantly and non-Opec production does not fall as fast as expected.”
