The World Bank has increased its 2017 price outlook for both metals and oil in its latest ‘Commodity Markets Outlook’, raising its October forecast for crude oil to US$55/bl, from US$53/bl in July. It has, however, sustained its forecast for an average oil price of US$43/bl in 2016.
Energy prices, which include oil, natural gas and coal, are projected to jump almost 25% overall next year, with coal prices expected to average $58/t in 2016, despite a 30% surge in thermal coal prices during third quarter of 2016.
However, the bank expects coal prices to reduce during 2017 on the back of supply additions and weak demand. “China’s coal policy will be key, given that the country consumes half of the world’s coal output and coal accounts for nearly two-thirds of the country’s energy consumption.”
Metals prices are projected to rise more sharply in 2017 than forecast in July, as a result of faster-than-expected mine closures.
“In 2017 metals prices are projected to increase by 4% as most markets continue to rebalance. The largest gain is for zinc, which is projected to rise more than 20%, on continued supply tightening from large mine closures.”
Meanwhile, precious metals prices, which rose 8% in the third quarter on strong investment demand and safe-haven buying, have increased by more than 20% this year.
“Precious metals prices are projected to rise 7% in 2016, mainly due to stronger investment demand,” the bank said.
