The price of Brent crude oil futures contracts for June delivery on London’s ICE rose by 3.8% to $46.24 per barrel.
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This forecast of firming energy prices, made in the World Bank’s latest edition of its Commodity Markets Outlook, is thus positive for producing countries in Asia and elsewhere, and also for central banks struggling to reverse persistent deflationary trends in their economies.
Crude oil market recovered from a low of $25 per barrel in mid-January to $40 per barrel in April, following production disruption in Iraq and Nigeria and a decline in non-organisation of Petroleum Exporting Countries output, mainly U.S. shale.
The World Bank increased its projection for prices next year to $50 per barrel, up from $48 per barrel in January.
State Governors in the country have been reeling in pains since a year ago when oil prices took a downward plunge as low as $25 per barrel.
World Bank boosted its forecast for oil prices this year, projecting that refinery demand will pick up and United States production cuts will steepen in the second half of 2016.
The World Bank is raising its 2016 crude oil price forecast to US$41 per barrel, up from $37 forecast earlier, as oversupply is expected to recede with improving market sentiment and a weakening dollar, the bank says in its Commodity Markets Outlook report.
He said all main commodity indexes tracked in the report are expected to decline in 2016 from the previous year, adding that energy prices are due to fall 19.3% while non-energy commodities are expected to drop 5.1%. At the same time, the lender reduced its forecast for non-energy commodities, as agricultural and fertilizer prices are expected to be weaker than projected at the start of the year. This amount was estimated in January at a 24.7 percent decline.
The market surplus is likely to continue in the first half of the year because of weak seasonal demand, but in the second half of the year, stockpiles are set to decline as refinery demand increases and U.S. production declines steepen, according to the World Bank.
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Ayhan Kose, director of the World Bank’s Development Prospects Group, said: “These project delays can adversely affect countries that can ill-afford such setbacks”.
