Energy Prices Forecast

Economic Forecasts

Trade Deal Optimism Boosts Oil Prices

Kiplinger's latest forecast on the direction of energy prices

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GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 170,000 per month in ’19 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.1% in ’19, up from 1.9% in ’18 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $50 to $55 per barrel in December More »
Housing 3.5% price growth by year-end ’19 More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7% in ’19 More »

Gasoline prices have stabilized recently, with the national average price of regular unleaded unchanged from a week ago at $2.61 per gallon. That’s two pennies cheaper than a month ago, and just eight cents less than this time one year ago. But we look for prices to slowly edge lower as 2019 comes to an end because of seasonally lower fuel demand and a tick down in oil prices. Diesel, now averaging $3.01 per gallon, is also unchanged from last week and figures to stay close to the $3 level, unless severe cold ramps up demand for chemically similar heating oil.

Oil prices are also holding fairly steady, with benchmark West Texas Intermediate crude recently trading at $57 per barrel. Energy investors seem to be bidding up oil a bit because of optimism that a potential trade deal between the United States and China could help the global economy and perk up worldwide demand for oil. But we are skeptical that any big breakthrough in the trade war is imminent, and we expect WTI to trade slightly lower by year-end, in a range of $50 to $55 per barrel.

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Even with severe cold gripping much of the country, natural gas prices are falling. The benchmark gas futures contract recently traded at $2.65 per million British thermal units, down a touch from last week. Record cold in the Midwest and elsewhere is driving up demand for heating fuel, which should push gas prices higher. But with forecasts showing a moderating trend next week, traders appear to be betting that the demand spike won’t last. Unless the coming winter proves significantly colder than normal, we look for gas prices to mostly stay below $3 per MMBtu.

Source: Department of Energy, Price Statistics