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WB increases forecasts on oil demand and prices

27 April 2016 14:49 (UTC+04:00)
WB increases forecasts on oil demand and prices

By Fatma Babayeva

The World Bank has raised its forecasts for oil demand and prices in its recently published Commodity Markets Outlook.

The Bank raised its oil price forecast for 2016 from earlier projected $37 to $41 per barrel per day.

The forecasts given in the Bank’s outlook indicate that the oil prices will increase to $50 per barrel in 2017 against the background of increasing demand.

The WB’s outlook emphasizes that high oil production by OPEC countries compared to what was expected and weak global economic growth may pose risk to oil prices.

In addition, the Bank also predicts an increase in global oil demand by 1.2 million barrels to 95.5 million barrels per day in 2016.

In addition, the outlook said that the oil demand of OECD countries will be flat, with modest gains in North America offset by losses elsewhere. However, oil demand in non-OECD countries is projected to rise by 1.2 million barrels per day (2.4 percent), somewhat slower than last year.

All of the OECD growth was in North America and Europe last year. Non-OECD oil demand trended modestly higher, rising by 1.4 million barrels per day (3 percent), with most of the growth in Asia.

Furthermore, growth is projected to slow in Asia, notably in China, but the region still accounts for the bulk of non-OECD growth, the outlook highlights.

According to WB, global oil demand grew by 1.8 million barrels per day or 2.0 percent in 2015, the highest growth in five years which is partly aided by low prices.

The WB also forecasts decrease in oil supply from non-OPEC countries.

The bank predicts a decline in oil supplies from countries outside OPEC by 0.7 million barrels per day in 2016 - mainly due to reduced production in the onshore U.S. fields.

The growth of oil supplies from countries outside of OPEC, is expected only in Canada and Russia by 0.1 million barrels in each of these countries in 2016.

The bank forecasts, the reduction of non-conventional oil production in the U.S. will help restore the balance between supply and demand on the world market.

At the same time, oil supply from the OPEC countries rose by 1.3 million barrels per day (mostly at the expense of Iraq and Saudi Arabia), and supply from non-OPEC countries by 1.4 million barrels per day (0 9 million barrels per day out of it accounted for the U.S.).

What’s more, oil supplies from Brazil, Canada, the North Sea region and Russia increased largely due to earlier made investments in large projects.

However, the situation in the global oil market remains uncertain whether the oil production will shrink or not.

Regarding the current situation in the market, global oil prices experienced growth on April 27.

June futures for WTI crude rose by 1.29 percent to $44.61 per barrel on the NYMEX while June futures for North Sea Brent crude increased by 0.18 percent to $46.28 per barrel on the London ICE Futures Exchange.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

Follow us on Twitter @AzerNewsAz

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