The World Bank has lowered its 2016 forecast for crude oil prices to $37 per barrel in its latest Commodity Markets Outlook report. This is dramatically down from its $51 per barrel in its October 2015 projections.
The lower forecast reflects a number of supply and demand factors. These include sooner-than-anticipated resumption of exports by the Islamic Republic of Iran, greater resilience in United States production due to cost cuts and efficiency gains, and weak growth prospects in major emerging market economies, according to the World Bank's latest quarterly report.
Oil prices fell by 47% in 2015 and are expected to decline, on an annual average, by another 27% in 2016. "Low prices for oil and commodities are likely to be with us for some time," said John Baffes, senior economist and lead author of the Commodities Markets Outlook. "While we see some prospect for commodity prices to rise slightly over the next two years, significant downside risks remain."
