Oil prices rebound as World Bank lowers forecast

One day after oil prices fell based on a larger-than-expected build in US crude inventories, the prices have risen, moving over $48 a barrel.

Brent for December delivery rose 38 cents to $48.23 a barrel and US crude for December delivery climbed 40 cents to $45.60 a barrel.

US crude inventories had risen more than twice what analysts had expected.

US crude stocks surged sharply for a second week, climbing 8 million barrels in the week to October 16, and data from the US Department of Energy’s Energy Information Administration (EIA) showed on Wednesday.

That jump followed a rise of more than 7.5 million barrels in the previous week and put US crude stocks up more than 22 million barrels over the last four weeks.

Oil experts from the Organisation of the Petroleum Exporting Countries and non-member countries made no agreement this week to boost prices, officials said after talks in Vienna on Wednesday.

Meanwhile, the World Bank has lowered its 2015 forecast for crude oil prices from $57 per barrel in its July report to $52 per barrel.

This is according to the bank’s new commodity markets outlook, a quarterly update on the state of the international commodity markets.

The update was derived from the bank’s website.

It said the revised forecast reflected a further slowing in global economic performance, high current oil inventories and expectations that Iranian oil exports would rise after the lifting of international sanctions.

The report said the bank’s energy price index tumbled 17 percent in the third quarter of 2015 from the previous three-month period.

“This was led by a renewed plunge in oil prices prompted by expectations of slower global growth, particularly in China and other emerging markets, abundant supplies and prospects of higher Iranian exports next year,” a statement on the bank’s website, read.

It also said that energy prices were expected to average 43 percent lower in 2015 than in 2014.

For commodities excluding energy, the bank reports a five percent decline in prices in the third quarter and forecasts that non-energy prices will register a 14 percent decline in 2015 from the previous year’s levels.

It quoted John Baffes, senior economist and lead author of Commodity Markets Outlook as saying: “We see a five-year-long slide in most commodity prices continuing in the third quarter of 2015.

“There are sufficient inventories of oil and other commodities and demand is weak, especially for industrial commodities, which is why prices may stay persistently low.

The statement also said that there were possible effects of the Iran Nuclear Agreement on global energy markets.

It said within several months, Iran could increase crude oil production by 0.5-0.7 million barrels per day (mb/d), potentially reaching a 2011 pre-sanctions level of 3.6 mb/d.

In addition, Iran could immediately begin exporting from its 40 million barrels of floating storage of oil.

This is because since Iran has the largest known gas global reserves (18 percent of the world total), it has the potential to produce and export a significant volume of natural gas over the long term.