World Bank raises crude price forecast

NEW YORK

The price forecast for crude oil in 2016 has been upgraded from $41 a barrel from $37 amid improving market conditions and a weakening dollar, the World Bank said Tuesday.

"Oversupply in markets is expected to recede," according to the bank.

"We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply," said senior economist John Baffes.

He warned, however, that there is still the possibility that oil prices could fall further if OPEC significantly increases production and non-OPEC production does not fall as fast as market expectation.

World Bank said energy prices are due to fall 19.3 percent in 2016 from the previous year. This amount was estimated in January at a 24.7 percent decline.

Due to oversupply around the world and low global demand, crude oil prices began falling in June 2014 from $115 per barrel. Prices dipped below $30 in January to reach their lowest level in 13 years.

Prices have recently recovered gradually to the $42 to $45 range, as non-OPEC U.S. production declined and hopes of OPEC freezing production levels.