World Bank forecasts average oil price of $ 37 for 2016

The World Bank (WB) predicted today that the fall in the average price per barrel of crude will continue in 2016 to $ 37, in a context of weakness in emerging economies and increasing the available supply Iran with the re-entry markets international.

In just three months since his previous calculations, when its forecast for 2016 stood at $ 51 a barrel, the Bank has significantly lowered its estimate to $ 37 average and warned that this trend will continue “for some time”.

This downward revision to several factors including the authorization for exports of Iran are behind the fruit to sanctions according to international nuclear powers; “resistance” shown by US producers at current low prices to improve their efficiency and the “warm winter” in the northern hemisphere.

Likewise, the “weak” prospects for economic growth in emerging markets will contribute to this decline in prices due to lower demand for some of these countries, with China leading the way.

Emerging markets have been “the main sources of demand since the beginning of the century, so a greater slowdown could reduce the growth of its trading partners and the global appetite” stressed the report.

The effects of this decline are opposite in the producing countries, the big losers, and consumers benefit from seeing reduced its energy bill.

However, Ayhan Kose, director of WB Development Prospects, noted that “it takes a while that the benefits of lower prices for raw materials are transformed into higher economic growth among importers, while exporters are feeling the problem right now” .

Among the most affected, the main global development institution cited countries like Ecuador, Russia, Nigeria, Venezuela, Angola and Colombia.

By 2017, projections put the price of a barrel of oil at $ 48, according to data from quarterly report on raw materials from the body.

This “gradual” rally will be given because producers will be forced “to resort to production cuts amid growing losses, which probably offset any added supply” and demand is expected to strengthen “slightly” in the medium term through a global rebound.

In any case, the WB report stressed that this rebound will be much lower than experienced after heavy falls of 2008 and 1998, and the outlook is subject to “considerable downside risks”.

It’s not just oil, other raw materials have similar factors, and metal prices recorded a decrease of 10% in 2016 after falling 21% suffered in 2015.

In 2016, the iron is expected to fall 25%, followed by nickel, down from 16; and copper, with a reduction of 9%; all weighed down by the slowdown in China and the high levels of supply as a result of the new installed in producing countries such as Australia and Brazil capacity.

Meanwhile, food prices will also be reduced, to a lesser extent, by 1.4%, thanks to high inventories and lower energy prices, especially corn and rice

Leave a Reply

Your email address will not be published. Required fields are marked *

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>