Commodity Prices To Rise In 2018; Oil Supply From Nigeria Could Be Volatile

Oil prices to average $56 a barrel in 2018, up
from 2017 average of $53/bbl
Oil prices are forecast to rise to $56 a barrel in
2018 from $53 this year as a result of steadily
growing demand, agreed production cuts among
oil exporters and stabilizing U.S. shale oil
production, while the surge in metals prices is
expected to level off next year, the World Bank
said on Thursday.
Prices for energy commodities – which include
oil, natural gas, and coal — are forecast to climb
4 percent in 2018 after a 28 percent leap this
year, the World Bank said in its
October Commodity Markets Outlook. The
metals index is expected to stabilize in the
coming year, after a 22 percent jump this year
as a correction in iron ore prices is offset by
increased prices in other base metals. Prices for
agricultural commodities, including food
commodities and raw materials, are anticipated
to recede modestly in 2017 and edge up next
year.
"Energy prices are recovering in response to
steady demand and falling stocks, but much
depends on whether oil producers seek to
extend production cuts," said John Baffes, Senior
Economist and lead author of the Commodity
Markets Outlook. "Developments in China will
play an important role in the price trajectory for
metals."
The oil price forecast is a small downward
revision from the April outlook and is subject to
risks. Supplies from producers such as Libya,
Nigeria, and Venezuela could be volatile.
Members of the Organization of the Petroleum
Exporting Countries (OPEC) and other producers
could agree to cut production further,
maintaining upward pressure on prices.
However, failure to renew the agreement could
drive prices down, as could increased production
from the U.S. shale oil industry. Natural gas
prices are expected to rise 3 percent in 2018,
while coal prices are seen retreating following a
climb of nearly 30 percent in 2017. China's
environmental policies are anticipated to be a
key factor determining future trends in coal
markets.
Iron ore prices are forecast to tumble 10 percent
in the coming year but tight supply should push
up prices for base metals including lead, nickel
and zinc. Downside risks to the forecast include
slower-than-anticipated demand from China, or
an easing of production restrictions on China's
heavy industries.
Gold prices are anticipated to ease next year on
expectations of higher U.S. interest rates.
Agriculture prices are expected to edge up in
2018 due to reduced supplies, with grain and
oils and meals prices rising marginally.
Agricultural commodities markets are well-
supplied and the stocks-to-use ratios (a measure
of how well supplied markets are) of some
grains are forecast to be at multi-year highs.
However, favorable weather patterns, well-
supplied global food markets, and relatively low
world prices do not necessarily imply ample food
availability everywhere. Drought conditions that
are by some accounts the worst in 60 years,
have caused crops failures in parts of Ethiopia,
Somalia and Kenya and led to severe food
shortages. Conflicts in South Sudan, Yemen and
Nigeria have driven millions of people from their
homes and left millions more in need of
emergency food.
The World Bank's Commodity Markets
Outlook provides detailed market analysis for
major commodity groups, including energy,
metals, agriculture, precious metals, and
fertilizers. The report includes price forecasts to
2030 for more than 45 commodities. It also
provides historical price data and supply,
demand, and trade balances for most
commodities.