World Bank raises 2017 crude oil price forecast

MANILA, Philippines - The World Bank (WB) has raised its 2017 forecast for crude oil prices to $55 per barrel from its July outlook of $53 per barrel as petroleum producing countries prepare to limit production after a long period of unrestricted output.

In its latest Commodity Markets Outlook, WB said energy prices—oil, natural gas and coal—are expected to rise by as much as 25 percent next year.

 For this year, oil prices are expected to average $43 per barrel, unchanged from the outlook in July.

“We expect a solid rise in energy prices, led by oil, next year, said John Baffes, WB senior economic and lead author of the Markets Outlook.

“However, there is considerable uncertainty around the outlook as we wait the details and the implementation of the OPEC (Organization of Petroleum Exporting Countries), which, if carried through, will undoubtedly impact oil markets,” he added.

OPEC would be restricting production for the first time since 2008. The 14-member association agreed in September that there was a need to cut crude oil output to reduce global supply glut.

Details of the supply cut are expected to be finalized next month.

According to the WB, a modest recovery is projected for the prices of most commodities in 2017 as demand rises and supplies tighten.

Metal and mineral prices are expected to rise by 4.1 percent next year due to supply restrictions.

Zinc prices are seen to rise by more than 20 percent after the closure of some large zinc mines in recent years.

Gold prices, however, are expected to decline slightly next year to $1, 219 per ounce as interest rates are expected to rise, resulting to a fallback in buying of safe haven assets.

Agriculture prices are also forecast to rise at a more gradual pace of 1.4 percent in 2017 (down from the 1.5 percent projection in July) as food prices are seen to grow slower. Beverage prices are seen to drop by 0.6 percent on expectations of large coffee production.

Prices of oils and meals are likewise seen to rise at a slower pace of two percent.

Grains prices, meanwhile, are forecast to rise faster at 2.9 percent.