São Paulo – The World Bank revised up its forecast on the average price of the oil barrel from USD 53 to USD 55 in 2017, according to the report Commodity Markets Outlook made available this Thursday (20) by the bank. The previous forecast is from July.
The IBRD (International Bank for Reconstruction and Development, part of the World Bank group) believes that the members of the Organization of the Petroleum Exporting Countries (OPEC) are getting ready to cut output after a long period without a decline despite the almost constant fall of prices the last two years. For 2016, however, the bank kept its forecast on the average oil barrel price at USD 43.
Early Thursday afternoon, the WTI barrel was being dealt at USD 50.50 in New York, a decline of 1.1% after the strong surge of the previous day. In London, the Brent barrel was being priced at USD 51.42, a drop of 1.25% after also experiencing a surge on Wednesday.
The prices of the energy sector in general, including oil, natural gas and coal, could surge around 25% next year, according to the World Bank, surpassing the forecast made in July.
“We expect a solid rise in energy prices, led by oil, next year”, said John Baffes, senior economist and lead author of the report, in a statement by the bank. “However, there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets,” he added.
For the organization, most commodities should see a “modest recovery” next year as demand strengthens and supplies tighten. Metals and minerals could see prices rise up to 4.1%, a forecast that surpass in 0.5 percentage point the previous one done in July.
In the agriculture sector, the forecast signals to an 1.4% increase in prices, slightly less than the July estimate. The bank believes that food prices “are projected to climb more gradually than anticipated” and that beverage prices “are seen dropping by a greater extent” due to expectation of a “large coffee output.” The bank is expecting the price of grains to increase 2.9% and the price of oils and meals to go up by 2%.
“Low commodity prices hit commodity-exporting emerging and developing economies hard but now appear to have bottomed out”, said Ayhan Kose, director of the World Bank’s Development Prospects Group, in the bank’s statement.
Brazil, for instance, is a large exporter of agricultural and mineral commodities. However, the executive warns: “Growth in this group of economies is expected to be near zero for the year. Where feasible, policymakers should pursue growth-enhancing strategies, such as investments in infrastructure, health and education, in the context of a credible medium-term fiscal plan.”
*Translated by Sérgio Kakitani
