As Industrial Commodity Prices To Rise Too
The World Bank on Wednesday released its April Commodity Markets Outlook forecasting that crude oil price for this year could average $55 per barrel, before increasing to $60 per barrel in 2018, supported by production cutbacks by the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC states, expected to allow markets gradually rebalance.
The oil price forecasts are subject to downside risks should the rebound in the U.S. shale oil industry be greater than expected.
Prices for energy commodities, which also include natural gas and coal, according to the World Bank, are projected to jump 26% this year and 8% in 2018. In line with oil price forecasts, natural gas is anticipated to gain 15% this year, led by a jump in U.S. prices. Coal is seen climbing 6 percent in 2017, due to earlier supply restrictions in China, which consumes half the world’s coal output.
“Prices for non-energy commodities, which include agriculture, fertilizers, and metals and minerals, are forecast to increase in 2017, the first rise in five years. Metals prices are projected to jump 16 percent this year due to strong demand, especially from China, and supply constraints, including mine disruptions in Chile, Indonesia and Peru, the report added.
Among the components of non-energy commodities, the agriculture price index as a whole is expected to remain stable this year, as declines in grains are expected to be offset by price rises for oils and meals and raw materials.
“Favorable conditions have pushed stocks-to-use ratios to 15-year highs for wheat, maize and rice,’” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “Assessments point to a surplus this year and next for global supplies of key grains.”
Beverages, which include coffee, cocoa, and tea prices, are forecast to drop more than 6 percent in 2017 due to greater-than-expected supply. Agricultural raw materials are projected to rise 4 percent. The end of the El Niño/La Niña cycle limits upside price risk for the 2017-2018 agricultural commodity forecasts.
The World Bank’s Commodity Markets Outlook provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals, and fertilizers. The report includes price forecasts to 2030 for 46 commodities and provides historical price data.