The World Bank is nudging up its 2015 forecast for crude oil prices from 53 dollars in April to 57 dollars per barrel after oil prices rose 17 per cent in the April to June quarter.
The forecast is contained in the bank’s latest Commodity Markets Outlook released on Wednesday.
The bank said energy prices rose 12 per cent in the quarter, with the surge in oil offset by declines in natural gas and coal prices.
However, it said it expected energy prices to average 39 per cent below 2014 level.
“Natural gas prices are projected to decline across all three main markets including the United States, Europe and Asia.
“Coal prices are likely to fall 17 per cent”, it said.
Excluding energy, the bank reported a two per cent decline in prices for the quarter and forecast that non-energy prices would average 12 per cent below 2014 levels this year.
“Demand for crude oil was higher than expected in the second quarter. Despite the marginal increase in the price forecast for 2015.
“Large inventories and rising output from OPEC members suggest prices will likely remain weak in the medium-term,” said John Baffes, Senior Economist and lead author of the report.
The bank said Iran’s new nuclear agreement with the U.S. and other leading governments, if ratified, would ease sanctions, including restrictions on oil exports from Iran.
It said downside risks to the forecast included higher-than-expected non-OPEC production supported by falling production costs and continuing gains in OPEC output.
It also predicted possible upside pressures from closure of high-cost operations as the number of operational oil rigs in the U.S remains down 60 per cent since its November high.