The World Bank revised upward its 2015 crude oil price forecast to $57/barrel from $53/b in April, with demand higher than expected in the second quarter, particularly in the US.
However, large inventories and rising output from OPEC “suggest prices will likely remain weak in the medium-term,” John Baffes, the World Bank’s senior economist, said in a statement.
Related: Kings of Crude: US vs OPEC
The bank said it expects the price to rise to $61/b in 2016 as supply growth slows.
The price projections are included in the organization’s latest quarterly Commodity Markets Outlook.
It noted that the US rig count is down 60% since its November high, but oil production continues to grow more than 1 million b/d year on year.
“OPEC output also continues to surge, with June production 1.5 million b/d higher than a year earlier, with most of the gains in Iraq and Saudi Arabia,” the outlook said.
Global oil consumption rose 1.9 million b/d, or 2%, year on year in the first quarter, the bank said, estimating that second-quarter demand increased 1.4 million b/d, or 1.5%.
But the bank said it expects world oil demand growth to slow in the second half of the year, with the total annual global growth projected at 1.4 million b/d. The growth will slow further in 2016 to 1.2 million b/d, the report said.
Meanwhile, global oil supply outpaced demand in the first two quarters of the year, recording year-on-year growth of 3.1 million b/d in the first quarter and 3.3 million b/d in the second quarter, the bank said.