The World Bank sharply cut its outlook for oil prices – RBC

The World Bank cut its forecast for the average price of Brent crude in 2016 by 27%, from $ 51 to $ 37 per barrel, according to a survey released on Tuesday, 26 of January. The new forecast reflects the changes that have occurred in the supply and demand in October, when he was made the previous forecast.

Among the factors that influenced the decline, analysts of the World Bank led by John Buff called faster than expected, placing on the market of Iranian oil, resistant American manufacturers to cut costs and improve efficiency, as well as a warm winter and weak growth prospects for the major emerging economies. The growth of emerging economies has slowed from 7.6% in 2010 to 3.6% in 2015, according to the latest quarterly review of the World Bank about the prospects of global economic growth released on 7 January. Growth of the largest group of developing countries – the BRICS – slowed from 9 to 4%, reflecting the slowdown in the Chinese economy, the weak development in South Africa and the recession in Russia and Brazil.

«Oil prices have fallen by 47% in 2015 and we expect that they will fall by another 27% in 2016. Despite this, they gradually recover from its current low levels “, – said in the review. The reasons for the recovery of several: first, a sharp drop in oil prices at the beginning of 2016 does not reflect a fundamental change in the market and is likely to win. Second, the production of expensive oil will bring all the big losses and force manufacturers to reduce production volumes. Finally, demand for oil should be a little bit to get stronger thanks to the growth of the world economy, experts of the World Bank.

Life on the bottom: the western oil companies to adapt to a collapse in prices Gallery 2016 began with a new collapse in oil prices – the cost of a barrel of Brent in January already punched $ 28 per barrel. For comparison: in 2014 at the peak of oil was $ 114.99 per barrel, in 2015 – at $ 68.4. The excess of supply over demand, the slowdown of the Chinese economy, the lifting of sanctions to force Iran experts think that the period of low prices last long.
 
 Members of OPEC, led by Saudi Arabia and is not abandoning the chosen strategy – in spite of the sharp fall in prices, the cartel does not reduce the quotas for fear of losing market share. Fighting OPEC American shale oil produces results: in 2015 in the United States and Canada went bankrupt 42 companies slate, reports trade publication Oil Price. In total bankruptcy waits up to half of all US oil producers of shale oil – even if the price will rise to $ 50-60 per barrel, he said in a CNBC broadcast Head of analytical department of Oppenheimer & amp; Co Fadel Gheit. Saudi Arabia, according to him, wait for this moment. Because shale boom in the US in the early 2010s was one of the causes of excess supply in the oil market.
 
 Russian manufacturers are in no hurry to sound the alarm: for a flexible system of taxation and the devaluation of their business remains profitable, and at a price less than $ 20 per barrel. RBC decided to see how low prices are going through their western competitors.
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Estimated recovery in oil prices will not be as substantial as rebound after a sharp drop in oil prices in 2008, 1998 and 1986, and is still the risk of a further revision of the forecast oil prices downward, warns a senior economist at the World Bank’s commodity markets John buff. “Low oil prices and other commodities will remain with us for some time. Although we see potential for some recovery in prices in the next two years, there are significant downside risks to prices, “- he said.

From the beginning, the price of Brent crude oil fell 20%, to $ 37, 2 per barrel in the first day of trading on January 4 to $ 30.5 a barrel by close of trade on 25 January. Earlier this year, its forecast for oil lowered Societe Generale, ING, Barclays, Morgan Stanley, Bank of America Merrill Lynch and others. At the end of this year, analysts expect the market recovery. The consensus forecast of Bloomberg, based on a survey of 42 economists shows that experts expect oil prices to $ 39.2 per barrel in the first quarter of 2016. By year end, prices will rise to $ 51 per barrel, economists say.

The fall in prices in 2016 and is waiting for other commodities, the report says. Prices for non-energy commodity prices in 2015 fell by 10% and will be reduced further to 3.7% in 2016 due to the conservation of large stocks and a slowdown in demand in developing countries, which are the drivers of demand for raw materials in 2000. “It takes time to the effect of lower prices for raw materials transformed into higher economic growth in importing countries, while exporters are suffering from falling prices almost immediately”, – said the director of the Development Prospects Group of the World Bank Ayhan Kose.