W’Bank: Industrial Commodities Prices to Surge in 2017

The World Bank has projected strong gains for industrial commodities such as energy and metals in 2017, due to tightening supply and strengthening demand.

In its January 2017 Commodity Markets Outlook, the World Bank h steady its crude oil price forecast for the year at $55 per barrel, a 29 percent jump from 2016. The energy price forecast assumes members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers will partially comply with an agreement to limit production after a long period of unrestrained output.

The Bank raised its metals price forecast to an increase of 11 percent from the four percent rise anticipated in its October outlook on further tightening of supply and strong demand from China and advanced economies.

“Prices for most commodities appear to have bottomed out last year and are on track to climb in 2017,” the Senior Economist and lead author of the Commodity Markets Outlook, John Baffes said.

“However, changes in policies could alter this path.”

Agriculture prices as a whole was expected to rise by less than one percent in 2017. Small increases were anticipated for oils and oilseeds and raw materials, but grains prices are forecast to drop almost three per cent on an improved supply outlook. Precious metals prices were seen declining seven per cent as benchmark interest rates rise and safe-haven buying slows.

“Investment weakness – both public and private – hinders a range of activity in commodity-exporting emerging market and developing economies,” Director of the World Bank’s Development Prospects Group, Ayhan Kose said.