The World Bank is nudging up its 2015 forecast for crude oil prices from $53 in April to $57 per barrel after oil prices rose 17 percent in the April to June quarter, according to the bank's latest Commodity Markets Outlook released on Wednesday.
The Bank reported that energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas and coal prices. However, the bank expected energy prices to average 39 percent below 2014 level, according to the bank's quarterly update on the state of the international commodity markets, reported Xinhua.
Natural gas prices are projected to decline across all three main markets including the US, Europe and Asia. Coal prices are likely to fall 17 percent. Excluding energy, the World Bank reported a two percent decline in prices for the quarter, and forecast that non-energy prices will average 12 percent below 2014 levels this year.
"Demand for crude oil was higher than expected in the second quarter. Despite the marginal increase in the price forecast for 2015, large inventories and rising output from OPEC members suggest prices will likely remain weak in the medium-term," said John Baffes, senior economist and lead author of the report.
Iran's new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from Iran, the report noted.
Downside risks to the forecast include higher-than-expected non-OPEC production supported by falling production costs and continuing gains in OPEC output. Possible upside pressures may come from closure of high-cost operations as the number of operational oil rigs in the US is down 60 percent since its November high. Geopolitical tensions also generates such pressures.
In a special feature assessing the roles played by China and India in global commodity consumption, the report found that demand from China and, to a lesser extent, India, over the last two decades significantly raised global demand for metals and energy especially coal, but less so for food commodities.