The World Bank says the big drop in export commodity prices that led to significant economic shocks last year in commodity exporting countries including Nigeria may not occur in 2018.
According to the World Bank, countries trading in export commodities next year should look for small upticks in oil and crops prices. But overall, raw-material prices may get stuck in a bit of a lull.
This was the summary of a report issued on Thursday by analysts for the Washington-based World Bank, Bloomberg reported.
The Bank forecasts an index of energy products to climb by four per cent in 2018, while agricultural goods are expected to rise by 1.2 per cent and metals and minerals to drop by about 0.7 per cent.
The forecast came on the back of a rather boring period for the asset class. The Bloomberg Commodity Index tracking 22 products is down about two per cent this year and a measure of 60-day volatility has been waning since late July. Prices have remained subdued by large stockpiles, a trend that may be poised to continue.
“Last year and this year, most commodity markets are well supplied,” a senior economist at the World Bank, John Baffes, said in a telephone interview with Bloomberg. “We’ll not see a sort of major price increase for next year.”
Nigeria-based economic analyst, Mr. Johnson Chukwu, said the era of $100/barrel for oil price was over and that Nigerians should not expect that.
He said most analysts had predicted that oil price, Nigeria’s main source of Foreign Exchange and Revenue, would hover around $53/barrel next year. The World Bank forecasts in this latest report that oil price will average $56/barrel in 2018.
Chukwu said, “Well, if you look at where we were coming from last year when oil price averaged $45/barrel, the new forecast by the World Bank analysts is not too low for economic management in Nigeria.
What we should try to maintain is a good production level which fortunately is approaching two million barrels per day. But the 2.4mbpd output forecast by the Federal Government is optimistic, to me.”
According to the World Bank report, here are some of the Bank’s expectations in terms of oil price next year.
Crude oil is expected to extend recent gains amidst stronger use, moving from an average of $53 a barrel in 2017 to $56 next year, the Bank forecasts.
Increases in production from Nations outside the Organisation of Petroleum Exporting Countries will gain at about the same rate as global demand, leaving stockpiles without a “meaningful” reduction.
After a strong year for coal prices because of reductions in Chinese supply, prices may drop ahead amidst “environmental headwinds.”
For natural gas, demand is expected to be strong as chemical and fertilizer plants boost capacity and amid rising United States exports to Mexico and other countries. Prices are expected to climb three per cent next year, the report said.
For precious metals, platinum may rise by four per cent next year as mine output wanes. Meanwhile, gold and silver will face pressure from expected US interest rate increases. Base metals surged this year amid strong demand from China and supply challenges.
Prices are expected to ease next year as declining iron-ore prices offset strength in other commodities, including lead, nickel and zinc.
http://punchng.com/dont-expect-commodity-shake-up-next-year-wbank-tells-nigeria/
