The World Bank is raising its 2016 crude oil price forecast to US$41 per barrel, up from $37 forecast earlier, as oversupply is expected to recede with improving market sentiment and a weakening dollar, the bank says in its Commodity Markets Outlook report.
The crude oil market rebounded from a low of $25 per barrel in mid-January to $40 in April after production disruptions in Iraq and Nigeria and a decline in non-Organization of the Petroleum Exporting Countries (Opec) production and US shale.
"We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply," said John Baffes, a senior economist and lead author of the bank's report.
"Still, energy prices could fall further if Opec increases production significantly and non-Opec production does not fall as fast as expected."
All main commodity indexes tracked by the World Bank are expected to decline this year due to persistently elevated supplies and, in the case of industrial commodities such as 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 19.3% this year, a more gradual drop than the 24.7% decline forecast in January.
Non-energy commodities, such as metals and minerals, agriculture and fertilisers, are due to decline 5.1% this year, a downward revision from the 3.7% drop forecast in January, according to the World Bank.
The World Bank's forecast was in line with the forecast of Thailand's oil and gas conglomerate PTT Plc, which expects oil prices to be slightly firmer over the next few weeks due largely to falling supply.
PTT attribute the rises in oil prices to the reduction in oil rigs among US energy firms. Baker Hughes has cut its oil rigs for a fifth week in a row to the lowest level since November 2009.
Other factors that lend support to global oil prices recovering in recent weeks are a strike by Kuwaiti oil workers, which has cut oil supply by 1.7 million barrels per day, and falls in North Sea oil production.
The International Monetary Fund forecasts economic growth in the Gulf Cooperation Council's six oil-exporting nations will be 1.8% this year, down from 3.3% in 2015, and urged spending cuts.