As if to give lifeline to mono economies – dependent on oil commodity, the World Bank said on Tuesday that it has raised its oil price forecast for this year up from the previous level of $37 per barrel to a new height of $41.
The World Bank said crude oil market had rebounded to $40 a barrel in April due to production cuts in major oil producing countries like Iraq and Nigeria. It also based the situation on decline in non-Organization of the Petroleum Exporting Countries (OPEC) production, mainly U.S. shale, reports say. Official data showed that oil was sold for between $43 and $44 per barrel at the international market Tuesday.
According to the World Bank, the review of the forecast was necessitated by improving market indices and a weakening dollar. Saying, Commodity Markets Outlook, in an oversupplied markets, is expected to recede in the near future.“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply,” according to senior economist and lead author of the Commodities Markets Outlook, John Baffes. He however said “Still, energy prices could fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected.”
The World Bank officials who made the disclosure during a visit to the federal ministry of finance yesterday, averred that energy prices, including oil, natural gas and coal, would most likely fall by 19.3% in 2016 from the previous year, a more gradual drop than the 24.7% slide forecast in January.
70% of Nigeria’s revenue is generated through oil commodities. The nation’s economy has been on the brink of recession between last year and now when oil prices took a downward plunge to as low as $25 per barrel.