World Bank slashes oil price forecast with gradual recovery in view

oil field LocoSteveFLICKROil prices should decline another 27 percent in 2016 after plummeting by 47 percent last year, according to the outlook. (Image Source: LocoSteve/FLICKR)In its annual Commodity Markets Outlook, the World Bank has slashed crude oil forecast by US$14 to US$37/barrel stating that weak demand from emerging markets is likely to continue in 2016

The Bank lowered its forecast for 37 of 46 commodities stating weak demand would continue even as oil supply grows with the resumption of Iranian exports, continued production from the USA and a mild Northern Hemisphere winter.

World Bank economists said they expect a gradual recovery in oil prices over the course of 2016 but the rebound will be smaller than in previous years that followed sharp declines, including 2008, 1998 and 1986.

OPEC secretary-general Abdullah al-Badri said that the oil market was poised to start rebalancing itself, adding, “We already see some signs that supply and demand fundamentals will start to correct themselves in 2016.”

A lot of companies are looking at the current low prices as positive news, as it allows them to diversify investments. It opens up avenues for investments in other sectors, especially R&D in other cleaner energy resources.

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