Tight supply boosts energy prices
The World Bank is forecasting strong gains for industrial commodities such as energy in 2017 due to tightening supply and strengthening demand.
It is holding steady its crude oil price forecast for the year at $55 per barrel, a 29 per cent jump from 2016, according to its January 2017 Commodity Markets Outlook released today.
The energy price forecast assumes members of the Organisation of the Petroleum Exporting Countries and other oil producers will partially comply with an agreement to limit production after a long period of unrestrained output.
The Bank is raising its metals price forecast to an increase of 11 per cent from the four per cent rise anticipated in its October 2016 outlook on further tightening of supply and strong demand from China and advanced economies.
“Prices for most commodities appear to have bottomed out last year and are on track to climb in 2017,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “However, changes in policies could alter this path.”