The World Bank is raising its 2016 forecast for crude oil prices to US$43 per barrel from $41 due to supply outages and robust demand in the second quarter.
Oil prices jumped 37% in the second quarter, largely on the back of supply disruptions, particularly those caused by wildfires in Canada and sabotage of oil infrastructure in Nigeria.
The revised forecast appears in the World Bank's latest Commodities Markets Outlook and takes into account a recent softening of demand and the recovery of some disrupted supply.
"We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes," said John Baffes, senior economist and lead author of the Commodities Markets Outlook.
"However, inventories remain very large and will take some time to be drawn down."
The World Bank's forecast was in line with the report of PTT Plc, the national oil and gas conglomerate, which also anticipates the average oil price will move in the range of $42-$48 a barrel this year.
PTT's executive vice-president overseeing oil business, Saran Rangkasiri, said he also expected the average oil price to rebound slightly this year.
Due to the sluggish global economic outlook, however, PTT said it is unlikely for the price of oil to break the $50 threshold this year.
Siam Commercial Bank's Economic Intelligence Center (SCB EIC), citing a surplus in supply, has projected global oil prices to stay at $43-$45 a barrel in the third quarter.
This lines up with the view of Kasikorn Research Center, which recently predicted excess supply from the Organization of the Petroleum Exporting Countries.
Post-sanctions Iran, for example, is expected to export more oil, while Saudi Arabia has vowed to retain its global market share amid fierce competition from US shale oil.
With oil prices projected to stay relatively low, oil and gas exploration companies are likely put a hold on investment for new exploration.
PTT has also cut back on capital expenditures for the third consecutive time this year to bring its business plan in line with the current situation.
Meanwhile, despite the recovery of oil and many other commodity prices in the second quarter, most commodity indices tracked by the World Bank are expected to decline this year.
This trend is due to persistently elevated supplies, and in the case of industrial commodities -- which include energy, metals and agricultural raw materials -- weak growth prospects in emerging markets and developing economies.
Energy prices, including oil, natural gas and coal, are due to fall 16.4% this year, a more gradual decline than the 19.3% drop expected in April.
Non-energy commodities, such as metals and minerals, agriculture, and fertilisers, are expected to ease 3.7% this year, a more moderate contraction than the 5.1% forecast in the previous outlook.
Metals prices are projected to fall 11% in the coming year, a sharper decline than the 8.2% drop forecast in April, reflecting weak demand prospects and new capacity coming online.
Agricultural prices are forecast to fall less than previously projected as a result of reduced harvests in South America and rising demand for biofuels.