Energy Prices Forecast

Economic Forecasts

Lower Oil Prices Good News for Drivers

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.6% growth in '19 More »
Jobs Job gains about 160,000 per month in '19 More »
Interest rates 10-year T-notes at 2.8% by end ’19 More »
Inflation 2.0% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $60 to $65 per barrel in August More »
Housing 5.35 million existing-home sales in ’19, up 0.2% More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Oil prices still don’t know which way to go. Worries about the health of the global economy have led to a 20% decline in the price of benchmark West Texas Intermediate crude during the last month or so. But tensions between the United States and Iran after attacks on petroleum tankers in the Persian Gulf raise the possibility of hostilities in the global oil market’s most vital waterway. Plus, Venezuela’s economic crisis continues to weigh on that country’s oil exports, while civil war looms in oil-rich Libya. In other words, either demand or supply could weaken, and send prices higher or lower on short notice.

Recently, the price of a barrel of WTI has been hovering in the low $50s as traders try to balance these competing risks to the market. Further volatility is a near certainty in the short term, but we think prices will gradually trend somewhat higher over the summer. So far, demand for crude still looks decent in the United States, the world’s largest oil consumer. The economy appears to be slowing, but not going into recession. And the loss of exports from tumultuous parts of the globe is already happening. On balance, we think that spells higher prices.

Via E-mail: Energy Alerts from Kiplinger

Drivers have been enjoying a modest decline in gasoline prices since May. The national average price of regular unleaded fell by more than a nickel this week to reach $2.69 per gallon. Diesel is also off a few pennies. Retail prices will probably slip a little more, but they stand to move modestly higher later in the summer.

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The ups and downs of the oil market have had no effect on natural gas prices in the United States. They are simply down, with the benchmark gas futures contract recently trading at $2.40 per million British thermal units. Barring a summer heat wave that revs up electricity demand and forces gas-fired power plants to work overtime, natural gas prices are unlikely to climb much from their current low levels.

Source: Department of Energy, Price Statistics