World Bank raises 2017 oil price forecast

In its latest quarterly “Commodity Markets Outlook,” the Washington-based lender forecast that in 2017, the price of crude oil will average US$55 a barrel, raising its July projection of $53.

“We expect a solid increase in energy prices next year, led by oil,” said John Baffes, lead author of the report. However, he added, the forecast is subject to “significant uncertainty,” as markets await details and implementation of the OPEC agreement.

The report said OPECs ability to influence the oil price is likely to be tested by expanding oil supply from non-OPEC sources, including the US shale industry.

OPEC announced in late September its intention to cut output to 32.5 million barrels per day (bpd) from the current level of 33.24 million bpd, but the details will be discussed when members meet again in November in Vienna.

Overall, energy prices, including oil, natural gas and coal, are projected to jump almost 25 percent next year, according to the report; metals and mineral prices are forecast to rise 4.1 percent next year while agricultural commodity prices are likely to expand by a modest 1.4 percent in 2017.

“Low commodity prices have hit commodity exporters in developing and emerging market economies particularly hard, but now appear to be bottoming out,” said Ayhan Kose, director of the World Banks Development Prospects Group.     (A026/A011)