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Economic Forecasts

Oil Prices Change Little Despite OPEC Cuts

Kiplinger's latest forecast on the direction of energy prices


GDP 2.1% growth in ’17, following 1.6% in ’16 More »
Jobs Hiring pace should slow to 160K/month in '17 More »
Interest rates 10-year T-notes at 3% by end '17 More »
Inflation 2.4% in '17, up from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude oil trading from $55 to $60 per barrel in May More »
Housing Single-family starts up 9% in '16, 11% in '17 More »
Retail sales Growing 3.9% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Crude oil prices are staging a small rally this week. But they remain stuck in their recent trading range, with benchmark West Texas Intermediate recently changing hands at about $54.50 per barrel. We expect WTI to continue trading between $50 and $55 per barrel in coming weeks, before trending a bit higher as spring arrives.

Many oil traders appear optimistic that OPEC’s agreement to curb its crude output will push up prices. But even as some OPEC members cut back, others that weren’t included in the agreement, namely Libya and Nigeria, are rushing to ramp up exports. The United States is also quietly exporting more crude now that operators are putting more rigs to work, drilling new wells and pumping more oil. What’s more, U.S. oil stockpiles continue to build and recently hit a record high, which will help keep prices from moving much higher.

Via E-mail: Energy Alerts from Kiplinger

Prices at the pump could slip a few pennies in the near term before rising this spring. At $2.28 per gallon, the national average price of regular unleaded gasoline is unchanged from a week ago. Given that gasoline inventories are bulging and demand appears lackluster at the moment, a retreat toward $2.25 per gallon in the new few weeks wouldn’t be surprising. But we look for the arrival of spring to prompt more driving and more demand, with prices rising toward $2.50. Diesel, now averaging $2.51 per gallon, is unlikely to move much, either up or down.


For natural gas prices, the weather forecast couldn’t get much more bearish. Continued warm weather across most of the United States is weighing on heating demand and has sent the benchmark gas futures contract down to $2.60 per million British thermal units (MMBtu). That represents a sharp loss from a week ago, and suggests that traders are pricing in the possibility that a glut of gas will remain in storage when spring officially arrives. Only a return to more-normal winter temperatures could push gas prices back up above $3 per MMBtu at this point.

Source: Department of Energy, Price Statistics