W/Bank Reduces Oil Price Forecasts To $52/pb

The World Bank has reviewed downward its 2015 forecast for crude oil prices from $57 per barrel in its July report to $52 per barrel.
According to the bank’s new Commodity Markets Outlook, a quarterly update on the state of the international commodity markets, the revised forecast reflected a further slowing in global economic performance, high current oil inventories and expectations that Iranian oil exports would rise after the lifting of international sanctions.
It said that the Bank’s Energy Price Index tumbled 17 per cent in the third quarter of 2015 from the previous three-month period.
“This was led by a renewed plunge in oil prices prompted by expectations of slower global growth, particularly in China and other emerging markets, abundant supplies and prospects of higher Iranian exports next year.”
It also said that energy prices were expected to average 43 per cent lower in 2015 than in 2014.
For commodities excluding energy, the bank reports a five per cent decline in prices in the third quarter and forecasts that non-energy prices will register a 14 per cent decline in 2015 from the previous year’s levels.
It quoted John Baffes, Senior Economist and lead author of Commodity Markets Outlook as saying “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”.
The statement also said that there were possible effects of the Iran Nuclear Agreement on global energy markets.
It said that within several months, Iran could increase crude oil production by 0.5-0.7 million barrels per day (mb/d), potentially reaching a 2011 pre-sanctions level of 3.6 mb/d.

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