 "World Bank raises crude oil forecast for 2016")
Riding high on weakening dollar along with an improved market sentiment, the World Bank raised its forecast for crude oil prices in 2016. It increased the forecast from $37 a barrel to $41 a barrel, it noted in its Commodities Markets Outlook report.
“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply. Still, energy prices could fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected," said John Baffes, Senior Economist and lead author of the Commodities Markets Outlook.
Meanwhile, the institution revised downwards its outlook for commodities, citing oversupply and weak growth prospects in developing and emerging economies.
Non-energy commodities, such as metals and minerals, agriculture, and fertilizers, are due to decline 5.1% this year, a downward revision from the 3.7% drop forecast in January, the report added.
As a result of low metal and oil prices from their 2011 highs, development of natural resource projects will also take a hit in many emerging markets, the report said. “These project delays can adversely affect countries that can ill-afford such setbacks,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group. “Greater transparency, improved government efficiency and improvements in macroeconomic frameworks could soften such disruptions. Countries may prefer to wait for prices to start rising again before launching new natural resource development initiatives.”