World Bank Ups Forecast On Oil Price To $55/barrel for 2017

New York: World Bank enhanced its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel. Considering the decision by members of the Organization of the Petroleum Exporting Countries (OPEC) to keep tabs on production after a long period of unrestrained output, according to a report by rttnews published on Nasdaq website.

Energy prices comprising oil, natural gas and coal, are expected to rise about 25 percent in 2017. This is considered to be largest increase than projected in July. The Washington-based global lender in its latest quarterly Commodity Markets Outlook, said: "Oil prices are expected to average $43 per barrel this year, unchanged from the July report. We expect a solid rise in energy prices, led by oil, next year."

John Baffes, senior economist at World Bank and lead author of the report, further said: "We expect a solid rise in energy prices, led by oil, next year. However, there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets. The price growth forecast for metals and minerals for next year was raised to 4.1 percent next year, due to increasing supply tightness. Zinc prices are forecast to rise more than 20 percent, due to mine closures and earlier production cuts. Meanwhile, gold is projected to decline slightly next year to $1,219 per ounce as interest rates are likely to rise and safe haven buying ebbs."

World Bank has also made a forecast on modest recovery for most commodities in 2017 as demand strengthens and supplies tighten. Agriculture prices are expected to increase 1.4 percent in 2017, which is less than what was seen in July. The bank now expects food prices to climb more gradually than anticipated and beverage prices to drop by a greater extent on expectation of a large coffee output.