World Bank on Tuesday raised its forecast for crude oil prices in view of the supply disruptions and strong demand in the second quarter.
In its latest quarterly Commodities Markets Outlook report, the Washington-based lender forecast the crude oil prices in 2016 to reach 43 U.S. dollars per barrel, up from its April's forecast of 41 dollars per barrel.
Oil prices jumped 37 percent in the second quarter of 2016 due to supply disruptions, particularly wildfires in Canada and the damage of oil infrastructure in Nigeria.
"We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes," said John Baffes, lead author of the report.
The World Bank said that the revision also took into account the recent softening of demand and the recovery of some disrupted supply. Inventories remain very large and will take some time to be drawn down, said Baffes. As a result, energy prices, which include oil, natural gas and coal, are due to fall 16.4 percent in 2016, according to the World Bank's forecast.
The decline was smaller than its April's forecast of 19.3 percent drop. It expected metal prices to fall 11 percent this year, reflecting weak demand prospects and new capacity coming on line. Agriculture prices are forecast to fall 0.7 percent in 2016 as a result of reduced harvests in South America and plateauing demand for biofuels.
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