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Economic Forecasts

Some Relief in Sight at the Gas Station

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.9% pace in '18, up from 2.3% in '17 More »
Jobs A tight labor market will make hiring more difficult More »
Interest rates 10-year T-notes at 3.3% by end '18 More »
Inflation 2.4% in '18, up from 2.1% in '17 More »
Business spending Up 7% in '18, boosted by expanded tax breaks More »
Energy Crude trading from $60 to $65 per barrel in October More »
Housing Price growth: 5.0% by end of '18 More »
Retail sales Growing 5.1% in '18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in '18 More »

Gasoline prices remain annoyingly high for most drivers. The national average cost of regular unleaded now stands at $2.88 per gallon, up a penny from last week and not far below the four-year peak hit this spring. Pump prices are also about 60 cents higher than a year ago. Diesel, now averaging $3.17 per gallon, is up nearly 75 cents from a year ago.

But we look for prices to slowly recede this summer, largely because crude oil has become cheaper. Demand should remain heavy through summer, given the busy travel season. But stockpiles of gasoline are ample, and refiners are running hard to keep churning out more.

Oil prices have pulled back, with West Texas Intermediate recently trading at $68 per barrel, compared with more than $70 last week. The market will likely remain jittery, with brief price spikes and drops on any news about supply outages in key oil-producing countries such as Libya. In the longer term, we see oil prices gradually declining, with WTI trading from $60 to $65 per barrel in October. OPEC is pumping more crude, and energy firms in the United States are rushing to build enough new pipelines to keep domestic production growing. All that new supply should keep markets well-stocked.

Via E-mail: Energy Alerts from Kiplinger

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Natural gas prices continue to hover in a low trading range of about $2.70 to $2.90 per million British thermal units. Hot summer weather means plenty of demand for gas to keep power plants humming around the clock. But U.S. gas output is growing steadily and comfortably keeping pace with demand. So, unless a major heat wave grips most of the country and hangs around for weeks, gas prices probably won’t move much from their current level.

Source: Department of Energy, Price Statistics