Oil prices to rise in 2017: World Bank

Although oil prices are expected to average $43 per barrel in 2016, the World Bank announced today that it is raising its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel. The move comes in response to a decision by the Organization of the Petroleum Exporting Countries to limit production after a long period of unrestrained output.

Although the WB recognizes that OPEC’s ability to affect oil prices will be tested by the expansion of supply from unconventional sources, such as shale producers, the organization’s latest Commodity Markets Outlook is still predicting that oil prices will jump almost 25% next year. Natural gas and coal will follow suit. 

The international financial institution expects other metals and minerals prices to rally next year, in this case by 4.1%. This represents a 0.5 percentage point upward revision from previous forecasts and it’s due to increased supply tightness.

Zinc prices are predicted to rise more than 20% following the closure of some large zinc mines and production cuts in earlier years. Gold is projected to decline slightly next year to $1,219 per ounce as interest rates are likely to rise.

“Low commodity prices hit commodity-exporting emerging and developing economies hard but now appear to have bottomed out,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group. “Growth in this group of economies is expected to be near zero for the year,” he added.