On Friday, in Washington, in World Bank Commodity Markets Outlook for October 2020 which was released, the World Bank stated that the low oil prices are likely to continue till 2021 while prices of Agricultural and metal commodities are expected to rise.
The Bank said:
“Almost all commodity prices recovered in the third quarter of 2020 following steep declines earlier in the year due to the COVID-19 pandemic. Crude oil prices have doubled since their April low, supported by sharp oil supply cuts by OPEC+, but prices remain one-third lower than their pre-pandemic levels.”
Speaking on this publication, Ayhan Kose, World Bank Group Acting Vice President for Equitable Growth, Finance & Institutions and Director for the Prospects Group, said;
“The impact of COVID-19 on commodities has been uneven, and could have lasting effects for energy markets. When declines in commodity prices are short-lived, policy stimulus can buffer their impact. However, when prices remain depressed for an extended period, policymakers need to find solutions so their economies can adjust smoothly to a new normal.”
The Outlook states that “Oil prices are projected to average $41/bbl in 2020 before rising to $44/bbl in 2021, an upward revision from the April forecast of $35/bbl and $42/bbl. The forecast anticipates a slow recovery in consumption that is countered by a gradual easing in production restrictions among OPEC+.
“However, oil consumption is expected to remain below its pre-pandemic level until 2023. The main risk to the price forecast is an increase in the severity of the pandemic that could lead to renewed lockdowns, dampening economic growth and reducing travel. This would affect oil demand significantly more than other commodities.”
Metal prices are expected to post modest increases in 2021 after falling in 2020, similarly, agriculture prices are expected to rise slightly in 2021, following an estimated 3 per cent increase in 2020 following some shortfall in edible oil production.