(Ecofin Agency) - The World Bank in its recent Commodity Markets Outlook report, dropped the 2016 prediction for crude oil prices to $37 a barrel from $51 per barrel in its October forecasts.

The reduced forecast reveals several supply and demand factors which include unexpected recommencement of exports by Iran, larger resilience in U.S. output as a result of the reduction of expenses and efficiency gains as well as a weak growth prospects in key emerging market economies.

The prices of crude oil dropped by 47 % in 2015 and are estimated to fall by an additional 27 % in 2016 on a yearly average. From their present downward trend, a steady recovery is anticipated.

According to World Bank, the expected oil price recovery is however predicted to be lesser than the recovery that occurred after the sharp drops in 2008, 1998, and 1986.

“Low prices for oil and commodities are likely to be with us for some time. While we see some prospect for commodity prices to rise slightly over the next two years, significant downside risks remain”, John Baffes, a Senior Economist told Offshore Energy Today.

Anita Fatunji