Energy, metals commodity prices seen strengthening

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Prices for most industrial commodities, notably energy and metals, are usually projected to rise in 2017 while agricultural prices are expected to remain stable, the World Bank says in its Apr 2017 Commodity Markets Outlook.

Closely watched crude oil costs are forecast to rise to an typical of $55 per barrel (bbl) over 2017 from $43/bbl in 2016, climbing to $60/bbl next year. The forecast is unchanged considering that October and reflects the balancing effects of production cuts agreed by Organization of Petroleum Exporting Nations (OPEC) and other producers on one part and a faster-than-expected rebound in the U. S. shale oil industry around the other. World oil demand keeps growing strongly, although at a slower pace than the 2015 spike triggered by lower oil prices.

There are significant risks to the oil price forecast. On the upside, stronger demand and greater compliance by OPEC and other producers to the production cut arrangement could accelerate rebalancing. So could any supply outages among major exporters. An OPEC decision to expand production cuts or increasing production cuts would also assistance higher prices.

Drawback price risks include weaker compliance with the OPEC agreement, rising result in major exporters, or slower demand growth. A faster-than-expected rise in U. S. shale oil manufacturing could also affect the supply balance.

Prices for metals, which include iron ore, zinc, lead, and copper, are projected to jump 16 percent. The gain within this index reflects strong demand from China and a number of supply restrictions that include labor strikes, contractual disputes, and export policies. China’s work to boost its commodity-intensive infrastructure and construction sectors has been a key drivers of metals demand. However , China’s transition to a consumption-led economy, along with industrial reform and environmental worries, is expected to ease growth in metals demand.

Precious metals prices are projected to drop by 1 percent in 2017 as well as a further 1 percent in 2018 since benchmark interest rates rise and safe-haven buying ebbs.

The particular agricultural commodity price index is definitely anticipated to remain broadly stable in 2017, with moderate increases within oils and meals and unprocessed trash offset by declines in grains and beverages. There are currently sufficient supplies of most food commodities, and the case of grains, stock-to-use proportions are expected to reach multi-year highs. The finish of the El Niño/La Niña routine, which began in late 2015, limits upside risks to 2017 agricultural price forecasts.

The outlook can be downloaded here plus detailed prices forecast for 46 commodities up to 2030 here. Previously reports and forecast can be found here.

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