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Economic Forecasts

Gas Prices Continue Their Climb

Kiplinger's latest forecast on the direction of energy prices

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GDP 2018 growth is 2.9%; 2.5% for 2019 More »
Jobs Job gains will be around 180,000 per month in 2019 More »
Interest rates 10-year T-notes at 2.8% by end ’19 More »
Inflation 2.2% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $55 to $60 per barrel in June More »
Housing 5.35 million existing-home sales in ’19, up 0.2% More »
Retail sales Growing 4% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Gasoline prices keep marching higher this spring, with the national average price of regular unleaded now at $2.83 per gallon, up nine cents from a week ago. That’s also 30 cents higher than one month ago, an increase that drivers are surely noticing every time they fill up. We continue to think that the national average price will reach $3 later this spring, a level not seen since 2014. Given the outlook for a particularly busy summer travel season, plenty of road trippers will be feeling the pain at the pump. Diesel, now averaging $3.07 per gallon, is also up a few cents from last week.

Costlier crude oil is the main reason for higher retail fuel prices. Benchmark West Texas Intermediate crude recently traded at $63.50 per barrel, which is only slightly below its highest level of the year. Four months ago, WTI was trading near $45 per barrel. Since then, production cuts by OPEC have set off one of oil’s biggest rallies in history.

Via E-mail: Energy Alerts from Kiplinger

Oil prices could push a bit higher in the near term. But we think they will crest fairly soon and retreat a bit, with WTI trading from $55 to $60 per barrel in June. The recent price run-up is giving energy firms in the United States more incentive to drill new wells and rush the completion of new pipelines to bring more oil to market. It’ll also be harder for OPEC members and their partner Russia to keep production low when prices are high and the temptation rises to cash in by exporting more.

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Natural gas prices continue to edge lower, now that most of the country has warmed up and heating demand has fallen off. The benchmark gas futures contract was recently trading at $2.61 per million British thermal units. A summer heat wave that cranks up electricity demand could give gas prices a boost. But until that happens, we expect gas futures to remain well below $3 per MMBtu.

Source: Department of Energy, Price Statistics