World Bank has raised the crude price forecast for the year 2016. The price forecast for crude oil in this year has been upgraded to $41 a barrel from $37 amid improving market conditions and a weakening dollar.
“Oversupply in markets is expected to recede,” according to the bank forcast
“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply,” said senior economist John Baffes.
He warned, however, that there is still the possibility that oil prices could fall further if OPEC significantly increases production and non-OPEC production does not fall as fast as market expectation.
World Bank said energy prices are due to fall 19.3 percent in 2016 from the previous year. This amount was estimated in January at a 24.7 percent decline.
Due to oversupply around the world and low global demand, crude oil prices began falling in June 2014 from $115 per barrel. Prices dipped below $30 in January to reach their lowest level in 13 years.
Prices have recently recovered gradually to the $42 to $45 range, as non-OPEC U.S. production declined and hopes of OPEC freezing production levels.