The agreement of oil-exporting countries to cut production makes the World Bank install a positive prospect of world oil prices next year. In the October 2016 Commodity Market Outlook (CMO) report, the World Bank predicted that world oil prices in 2017 would reach US $ 55 per barrel. The projection is up from the previous report which reached US $ 53 per barrel. For oil prices this year, the World Bank still maintains its projections at US $ 43 per barrel.
"There will be a significant increase in prices of world commodity prices next year, where crude oil will be the leader of the increase,"
John Baffles, World Bank Senior Economist, Baffles said, his party saw the price of a number of energy commodities such as natural gas, coal, and crude oil would rise by 25% in 2017. The estimate was based on OPEC's decision at a meeting in Algeria last month.
The world organization, led by Saudi Arabia, agreed to cut world oil production by 700,000 barrels per day, from its normal production range of 33.24 million barrels per day. The price of a number of commodity products is predicted to rise due to an increase in global demand. Metal and mineral prices will rise 4.1% in 2017, up 0.5% from the previous prediction.
The close of a number of zinc mining giants in several countries has the opportunity to make a supply in the world decline. As a result, the price of these products will rise by 20% in 2017. The price of agricultural products is also predicted to rise by 1.4% next year. The only decline in prices occurred in gold. The price of gold in 2017 is projected to fall to US $ 1,219 per ounce.
This was due to sentiment over the planned hike in the Fed's benchmark interest rate, which caused safe-haven asset purchasing activities to decline.
"Low commodity prices have hit developing countries that rely on exports of natural products. However, we see that next year commodity prices will begin to recover, "said Ayhan Kose, Director of World Bank Development Prospects.
The World Bank asserted, next year uncertainty on the price and demand for commodity products, especially oil, is still haunted by uncertainty. Because Opec has not released details and official documents on the decision to cut world oil production released last month.
In addition, there is no definite evidence related to the involvement of non-OPEC member countries to participate in limiting production, making the world oil prices' opportunity to fluctuate again. As is well known, the most influential non-member countries of OPEC namely Russia have declared themselves to be involved in the policy of limiting oil production.
Vladimir Putin
The declaration was expressed by Russian President Vladimir Putin himself at the Energy World Congress meeting in Istanbul earlier this month. However, Putin's remarks were immediately opposed by Russia's biggest oil producer, Rosneft.
In his official statement, Chief Executive Rosneft Igor Sechin refused to join the government in limiting production. As is known, Rosneft accounts for 40% of Russia's oil production. Rosneft produces 4.1 million barrels per day.
Bisnis Indonesia, Page-3, Saturday, Oct 22, 2016.
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