2017: Hope for Nigeria, as oil prices likely to rise by 3.6%

Hope may have risen for Nigeria’s struggling economy as there are indications that oil prices may rise by 3.6 per cent in 2017.

As Organisation of the Petroleum Exporting Countries (OPEC)’s 14 oil producing nations agreed in September to modestly cut oil output later this year in an effort to bolster sagging prices, the World Bank said on Thursday that oil prices may rise by $2 dollars in the coming year.

It added that a modest recovery is projected for most commodities in 2017 as demand strengthens and supplies tighten.

The revised forecast appeared in the development bank’s latest Commodity Markets Outlook. Oil prices are expected to average $43 per barrel in 2016, unchanged from the July report.

The bank said it was raising its 2017 oil prices forecast to $55 per barrel from $53 per barrel as members of the prepare to limit production after a long period of unrestrained output.

“We expect a solid rise in energy prices, led by oil, next year. However, there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets,” John Baffes, Senior Economist and lead author of the Commodity Markets Outlook, said.

The bank said it expects energy prices, which include oil, natural gas and coal, to jump almost 25 per cent overall in 2017, a larger increase than anticipated in July.

According the bank, metals and minerals prices are expected to rise 4.1 per cent next year, a 0.5 percentage point upward revision due to increasing supply tightness.

Zinc prices are forecast to rise more than 20 percent following the closure of some large zinc mines and production cuts in earlier years, the bank said, adding that gold is projected to decline slightly next year to $1,219 per ounce as interest rates are likely to rise and safe haven buying ebbs.