World Bank forecasts surge in oil prices
The World Bank has raised its 2016 forecast for crude oil prices to Sh4,100 ($41) from the current Sh3,700 ($37) per barrel. The forecast, carried in its latest Commodity Markets Outlook, comes amid improving market sentiment and a weakening dollar. The crude oil market rebounded from a low of Sh2,500 ($25) per barrel in mid-January to $40 per barrel in April following production disruptions in Iraq and Nigeria and a decline in non-Organisation of the Petroleum Exporting Countries (Opec) production. A proposed production freeze by major producers failed to materialise at a meeting in mid-April. “We expect slightly higher prices for energy commodities over the course of the year as markets re-balance after a period of oversupply,” said John Baffes, Senior Economist and lead author of the Commodities Markets Outlook.
“Still, energy prices could fall further if Opec increases production significantly and non-Opec production does not fall as fast as expected.” All main commodity indexes tracked by the World Bank are expected to decline in 2016 from the year before due to persistently elevated supplies, and in the case of energy, metals, and agricultural raw materials, weak growth prospects in emerging markets and developing economies.
By Protus Onyango
Wednesday, April 27th 2016