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Economic Forecasts

Gas Prices Finally Ease

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 2.6% 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 $65 to $70 per barrel in July More »
Housing Price growth: 5.0% by end of '18 More »
Retail sales Growing 4.9% in '18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in '18 More »

Gasoline prices continue their slow descent. The national average price of regular unleaded slipped two cents from a week ago, to $2.90 per gallon. That’s about a dime cheaper than the Memorial Day weekend peak. Odds are prices at the pump will keep edging down, albeit very slowly. Diesel, now averaging $3.19 per gallon, is off a penny from last week and will probably follow gas prices gradually down.

Crude oil prices have also dipped ahead of a key OPEC meeting later this week. Oil market watchers are expecting the cartel and nonmember Russia to announce an increase in their collective output quota now that a glut of stored crude around the world has largely disappeared. Soaring U.S. oil production has also helped to push benchmark West Texas Intermediate crude down to $65 per barrel from a high of about $72 a few weeks ago.

Via E-mail: Energy Alerts from Kiplinger

We look for WTI to trade from $65 to $70 per barrel in July, little changed from now. Global oil demand is robust, but the combination of more exports by OPEC and rising U.S. production should keep supply and demand fairly balanced.

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Natural gas prices keep treading water slightly below $3 per million British thermal units for the benchmark gas futures contract. Stockpiles of stored gas are much lower than normal for this time of year, but production is at a record high and demand for gas won’t ramp up unless sustained hot weather causes a spike in electricity usage. A major heat wave could send gas futures soaring above the $3 mark, but otherwise, we expect prices to remain close to where they are.

Source: Department of Energy, Price Statistics