By Benjamin Umuteme
Nigeria’s economy is set to witness a boom as the World Bank forecast that world oil prices will stabilize at $56 per barrel in 2018 from $53 recorded in 2017.
According to its October Commodity Markets Outlook, this will be partly due to steadily growing demand, agreed production cuts among oil exporters and stabilizing U.S. shale oil production.
The Bank added that the surge in metals prices is expected to level off next year.
The report noted that prices for energy commodities – which include oil, natural gas, and coal — are forecast to climb 4 percent in 2018 after a 28 percent leap this year.
Senior Economist of the Bank, John Baffes noted that energy prices are recovering in response to steady demand and falling stocks, but much depends on whether oil producers seek to extend production cuts, even as he added that developments in China will play an important role in the price trajectory for metals.”
“The oil price forecast is a small downward revision from the April outlook and is subject to risks. Supplies from producers such as Libya, Nigeria, and Venezuela could be volatile. Members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers could agree to cut production further, maintaining upward pressure on prices.”
The World Bank however, warned that “failure to renew the agreement could drive prices down, as could increased production from the U.S. shale oil industry. Natural gas prices are expected to rise 3 percent in 2018, while coal prices are seen retreating following a climb of nearly 30 percent in 2017. China’s environmental policies are anticipated to be a key factor determining future trends in coal markets.”
The report further noted that agriculture prices are expected to edge up in 2018 due to reduced supplies, with grain, oils and meals prices rising marginally.
The report however pointed out that favorable weather patterns, well-supplied global food markets, and relatively low world prices would not translate into ample food availability everywhere as drought conditions and conflicts in some parts of the continent have left millions more in need of emergency food.