The World Bank said Tuesday that it expects oil prices to remain below $40 a barrel in 2016, cutting its initial estimate from last fall by $14.
The Bank said weakened demand from growing economies and growing oil supplies around the world will keep prices down this year, according to its annual Commodity Markets Outlook.
“Low prices for oil and commodities are likely to be with us for some time,” John Baffes, senior economist and lead author of the report, said in a statement. “While we see some prospect for commodity prices to rise slightly over the next two years, significant downside risks remain.”
Oil prices fell 47 percent in 2015 and are projected to decline by another 27 percent in 2016. In its Jan. 12 outlook, the federal Energy Information Administration said it expects oil to average $40 per barrel this year.
Brent crude oil, the global benchmark, was trading around $32 per barrel on Tuesday. Oil dipped below $30, to its lowest level in 12 years, earlier this month.
But the World Bank said oil prices should rebound slightly, because of production cuts, demand increases and that “the sharp oil price drop in early 2016 does not appear fully warranted by fundamental drivers of oil demand and supply, and is likely to partly reverse.”