28 July, AtoZForex – Continuing its recent fall, oil prices have dipped even further, bouncing off three-month lows around 43.80 as we forecast in our analysis a few days back. Yesterday’s stockpile report from the Energy Information Administration (EIA), showed a surprising 1.7m build in stockpiles, as opposed to a fall of 2.3m forecast by economists. Sending prices crashing further down. Many expect that the renewed downward spiral for prices may now send oil into another dip towards lows seen earlier in the year.
World bank oil forecast
However, in the World bank oil forecast regarding the black gold, the bank has raised crude oil’s price forecast for this year to $43 a barrel from $41 a barrel in its April assessment, irrespective of the renewed fall. On the other hand, the bank also stated that prices are still expected to end the year lower compared with current levels. The world bank also noted that oil prices jumped over a third in the second quarter due to supply outages and strong demand. Hence, for the second half of the year, a fall in inventories was expected.
“The oil price rebound reflects a number of supply disruptions that removed up to 2.5 million barrels per day of production at peak during May and June, with large losses concentrated in Canada due to wildfires, and in Nigeria due to militant attacks on oil infrastructure. In addition, there were disruptions in other countries, including Kuwait, Iraq, and Libya,” added the World Bank.
Yet, the current prediction represents 15 percent decline from 2015, irrespective of the higher forecast. The fall in inventory has been offset by an increase in supply from other regions.
“Downside risks to the energy price forecast include higher-than-expected output and further weakening in growth (of emerging market and developing economies). Supply disruptions among key producers could lead to higher prices,” the World Bank added.
Non-OPEC producers again seem to be bearing the brunt as the world bank noted that production from non-OPEC countries declined. While OPEC production increased, thanks to Iran aggressive output levels after Western sanctions against the country were lifted.
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