In its latest commodity update, the World Bank is lowering its 2015 forecast for crude oil prices from $57 per barrel in its July report to $52 per barrel. For commodities excluding energy, the World Bank reports a 5% decline in prices in the third quarter of 2015, and forecasts that non-energy prices will register a 14 % decline in 2015 from the previous year’s levels.
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 latest quarterly ‘Commodity Markets Outlook’ report.
“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, World Bank senior economist and lead author of Commodity Markets Outlook.
The outlook report provides detailed market analysis for major commodities groups, including energy, metals, agriculture, precious metals, and fertilisers. According to the report:
· Metals prices fell 12% in Q3, the fourth consecutive quarterly decline, reflecting slowing demand, notably from China. The World Bank projects metals prices to fall by 16% in 2015.
· Precious metals prices fell 7% in Q3 and are likely to slide another 8% in 2015 on lower investment demand.
· Agricultural commodity prices fell by more than 2% in the quarter and are likely to fall by 13% in 2015, reflecting abundant supplies and high levels of existing grain stocks.
· Fertiliser prices fell 1% in Q3 and may decline by 1% in 2015 because of weak demand, and rising supply.
