The World Bank raised its crude oil forecast for 2016 to $43 a barrel on Tuesday, from $41 a barrel, citing supply outages and robust demand in the second quarter.
Disruptions in oil supply during the second quarter, including from militant attacks in Nigeria and wildfires in Canada, helped oil prices rebound from 12-year lows hit early in the year.
However, since peaking at about $51 a barrel early in June, a growing overhang in refined products has damped the demand outlook and resurgent supply from many of the outages has slowed the rebalancing of the crude oil market.
The World Bank said its latest forecast takes these recent developments into account.
“We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes,” John Baffes, senior economist and lead author of the World Bank’s quarterly commodities markets outlook, said in a statement.
“However, inventories remain very large and will take some time to be drawn down.”
U.S. crude on Tuesday fell 26 cents to $42.87 per barrel, a 0.6 percent loss after hitting a three-month low of $42.36.
U.S. crude stockpiles have fallen for nine straight weeks. But at about 519 million barrels, inventories are at historically high levels for this time of year, data from the U.S. Energy Information Administration showed last week.
Source: ReutersPrevious Next