Oil prices are forecast to average $65 a barrel in 2018, up from an average of $53 a barrel in 2017, on strong demand from consumers and restraint by oil producers, the World Bank said on Tuesday.
Metals prices are expected to rise 9 per cent this year, also on a pick-up in demand and supply constraints, according to it.
Prices for energy commodities – which include oil, natural gas, and coal -- are forecast to jump 20 per cent in 2018, a 16 percentage point upward revision from October’s outlook, the World Bank said in its April
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The metals index is expected to rise as a 9 per cent drop in iron ore prices is offset by increases in all base metals prices, led by nickel, which is forecast to rise 30 per cent.
Agricultural commodities, including food commodities and raw materials, are anticipated to see a price rise of over 2 per cent this year on diminished planting prospects. Weather disruptions are expected to be minimal.
“Accelerating global growth and rising demand are important factors behind broad-based price increases for most commodities and the forecast of higher commodities prices ahead,” said Shantayanan Devarajan, World Bank Senior Director for Development Economics and acting Chief Economist. “At the same time, policy actions currently under discussion add uncertainty to the outlook.”
Oil prices are expected to average $65/bbl over 2019 as well. Although prices are projected to decline from April 2018 levels, they should be supported by continued production restraint by OPEC and non-OPEC producers and strong demand.
“Oil prices have more than doubled since bottoming in early 2016, as the large overhang of inventories has been reduced significantly .” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “ Strong oil demand and greater compliance by the OPEC and non-OPEC producers with their agreed output pledges helped tip the market into deficit,” he added.