World Bank revises down forecast for oil priceNews // October 23, 2015
In its latest commodity update, the World Bank is lowering its 2015 forecast for crude oil prices from US$57 per barrel in its July report to US$52 per barrel.
The revised forecast reflects a further slowing in global economic performance, high current oil inventories, and expectations that Iranian oil exports will rise after the lifting of international sanctions, according to the Bank’s new Commodity Markets Outlook, a quarterly update on the state of the international commodity markets.
The Bank’s Energy Price Index tumbled 17 percent in the third quarter of 2015 from the previous three-month period, led by a renewed plunge in oil prices prompted by expectations of slower global growth, particularly in China and other emerging markets, abundant supplies, and prospects of higher Iranian exports next year.
Energy prices are expected to average 43 per cent lower in 2015 than in 2014.
“We see a five-year-long slide in most commodity prices continuing in the third quarter of 2015. There are sufficient inventories of oil and other commodities and demand is weak, especially for industrial commodities, which is why prices may stay persistently low,” said John Baffes, Senior Economist and lead author of Commodity Markets Outlook.
Uncertainty about Iran’s capacity to ramp up exports adds to risks to the energy-price forecast. Downside risks include higher-than-expected OPEC production and continuing falling costs along with improved productivity of the US shale oil industry. Slowing demand and high stocks could further weigh on oil prices. Upside risks include: an accelerating decline in US shale oil output, and reduced supply because of geopolitical events.