Mubasher: The World Bank is increasing its 2016 forecast for crude oil prices to $41 a barrel from $37 a barrel in its latest Commodity Markets Outlook, as the present oversupply is likely to diminish.

The crude oil market reversed a low of $25 a barrel in mid-January to $40 a barrel in April as a result of production disruptions in Iraq and Nigeria as well as a decline in non-Organization of the Petroleum Exporting Countries production, mainly U.S. shale, let alone the deadlocked end of Oil producers' Doha summit in mid-April.

Energy prices, including oil, natural gas and coal, are due to fall 19.3 % in 2016 from the previous year, a more gradual drop than the 24.7 % slide forecast in January.

"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, Senior Economist and lead author of the Commodities Markets Outlook, adding "Still, energy prices could fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected."

Beyond oil markets, all main commodity price indices are expected to fall in 2016 due to persistently large supplies, and in the case of industrial commodities, slowing demand in emerging market economies.

Non-energy commodities, such as minerals, agriculture, and fertilizers are due to decline 5.1% this year, a downward revision from the 3.7% forecast in January.

“Low commodity prices are a double-edged sword, where consumers in importing countries stand to benefit while producers in net exporting countries suffer,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group. “It takes time for the benefits of lower commodity prices to be transformed into stronger economic growth among importers, but commodity exporters are feeling the pain right away.”