The World Bank is raising its 2016 forecast for crude oil prices to $ 41 per barrel from $ 37 per barrel in its latest Commodity Markets Outlook.
This represents a drop of 19 per cent from the 2015, as an oversupply in markets is expected to recede.

In a statement made available to the Ghana News Agency by the World Bank’s Online Media Briefing Centre (OMBC), it said improving market sentiment and a weakening dollar was responsible for its position.

It said the crude oil market rebounded from a low of $ 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 production, mainly United States sale.

It indicated a proposed production freeze by major producers failed to materialise at a meeting in mid-April.

John Baffes, Senior Economist and lead author of the Commodities Markets Outlook said: "We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply."
"Still, energy prices can fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected," he said.

The statement said 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 industrial commodities, which include energy, metals, and agricultural raw materials as well as weak growth prospects in emerging market and developing economies.

It said energy prices, including oil, natural gas and coal, are due to fall by 19.3 per cent in 2016 from the previous year, a more gradual drop than the 24.7 per cent slide forecast in January.

It added that non-energy commodities, such as metals and minerals, agriculture, and fertilizers, are due to decline 5.1 per cent this year, a downward revision from the 3.7 per cent drop forecast in January.

It said a modest price recovery is projected for most commodities as demand strengthens looking to 2017 and projecting crude oil to rise to $50/bbl as the market moves into balance.

“This issue of the Commodity Markets Outlook examines the implications of resource development in an era of lower commodity prices and concludes that ambitious improvements in governance and sounder macro-economic policies are required to mitigate delays and risks,” the statement said.

It therefore advised governments seeking to newly develop natural resources may consider delaying new initiatives until the price outlook turns more favourable.