It is interesting to watch more and more experts improving their oil forecasts for 2016. The World Bank experts are some of them. To be more specific, they expect the oversupply currently seen in the global market of crude oil to shrink in the coming months. If that’s the case, this is definitely going to push oil prices higher.
Basically, that’s why they improved their forecast for the rest of the year. Given the multiple statements regarding oil production cuts made by some of the world’s major oil exporter out there, productions cuts are fairly likely in the near future.
The World Bank's official website contains a revised forecast. This is an improved and more optimistic one. The preliminary forecast used to expect the average price of oil at $37/b for 2016. The revised one improved the price all the way up to $41/b. By the way, one of the key reasons for the improved expectations beyond the shrinking oversupply is the fact that the U.S. Dollar start losing its ground against other major currencies. At the same time, you probably know that crude oil and other major commodities out there are traded for dollars, which is why the dollar and crude oil are negatively correlated, i.e. when the dollar goes down in value, crude oil goes in the opposite direction and gets stronger.
