The World Bank yesterday revised upwards its 2017 forecast for crude oil prices, raising it from $53 per barrel to $55 per barrel as members of the Organization of the Petroleum Exporting Countries (OPEC) prepare to cut output after a long period of unrestrained output.
The Bank, in its latest Commodity Markets Outlook, projected that energy prices, which include oil, natural gas and coal, will jump almost 25 percent overall next year, a larger increase than anticipated in July, while oil prices are expected to average $43 per barrel this year, unchanged from the July report.
The Senior Economist and lead author of the Commodity Markets Outlook, John Baffes 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 Breton Woods institution also projected modest recovery for most commodities next year as demand is expected to strengthen while supplies will be tight.
On metals and minerals prices, the World Bank forecasts that these are expected to rise 4.1 percent next year, a 0.5 percentage point upward revision due to increasing supply tightness.
“Zinc prices are forecast to rise more than 20 percent following the closure of some large zinc mines and production cuts in earlier years.
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”, it projected.
It would be recalled that over the past months of prolonged lull in the international oil market, prices have ebbed so low that commodity-dependent exporting countries, including Nigeria, have continued to contend the negative fiscal implications for their economies.