The World Bank lowers oil price forecast for 2016 to $37 per barrel

Almaty. January 27. Silkroadnews - According to the Russian mass media, the World Bank lowered the anticipated oil price to $37 per barrel.
“The world Bank (WB) has lowered its forecast for the average price of Brent crude oil in 2016 immediately at 27%, from $51 to $37 dollars for barrel,” – the publication says.
Among the factors that influenced the decline, the WB analysts called faster-than-expected arrival on the market of Iranian oil, the vitality of American manufacturers, override costs and improved efficiency, as well as a warm winter and weak growth prospects of major emerging economies.
“Oil prices have fallen by 47% in 2015, and we expect they will fall by another 27% in 2016. Despite such a drop the prices will gradually recover from its current low levels,” the review stated.  
There are several reasons for recovery: first, a sharp drop in oil prices in early 2016 does not reflect fundamental changes in the market and will likely be played out. Second, the production of expensive oil will lead to heavy losses and forced producers to cut production. Finally, the oil demand should get stronger due to the growth of the global economy, the World Bank experts say.
Yet, the forecasted recovery in oil prices will not be as significant as a rebound after a sharp fall in oil price collapses in 1986, 1998 and 2008.
“Low prices for raw materials is a double-edged sword: consumers in importing countries “have the best of a bargain” from them, though the producers in the exporting countries suffer. To convert the advantages of lower prices for raw materials into the strengthening of economic growth in importing countries shall take time, while the negative consequences for the commodity exporters are evident now”, - said the director of development prospects group of the World Bank Ayhan Kose.
Energy as a whole is likely to fall in price by another 25% as compared to 2015.
As for commodity prices, excluding energy, in 2016 they will probably decrease by 3.7%, including 10% drop in metal after a sharp fall by 21% in 2015. The cost of agricultural production is expected to decrease by 1.4%, as higher food stocks will reimburse a possible reduction in crop yields due to El Niño, the bank report states.
Within the group of metals and raw materials the strongest decline, as the World Bank experts forecast, is expected in iron ore (-25%). Such dynamics is caused by the weakening of demand, especially from China.
The annual average price of gold in 2016, according to the bank’s forecasts, will decrease by 7.3% to $1075 per troy ounce, not to $1156, as it was forecasted in October.
In 2017 prices of the most commodities will increase significantly compared to the current year, in particular, we are forecasted to see a rise in average annual oil prices to $48 per barrel (in October the forecast said about increase to $54.6 per barrel). Yet gold is expected to fall in price to $1066 per ounce.