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Economic Forecasts

Oil Market Heats Up

Kiplinger's latest forecast on the direction of energy prices


GDP 2.2% pace in '17, 2.6% in '18 More »
Jobs Hiring pace should slow to 175K/month by end '17 More »
Interest rates 10-year T-notes at 2.4% by end '17 More »
Inflation 2.1% in '18, up from 1.9% in '17 More »
Business spending Rising 3%-4% in '17, after flat '16 More »
Energy Crude trading from $50 to $55 per barrel in February More »
Housing Existing-home sales up 1.3% in '17 More »
Retail sales Growing 3.8% in '17 (excluding gas) More »
Trade deficit Widening 6% in '17, after nearly flat '16 More »

Gasoline prices are perking up in the wake of crude oil’s recent rally. Although still below the peak hit in September, the national average price of regular unleaded is up three cents from a week ago to $2.56 per gallon. We look for pump prices to rise at least a few cents more before gradually pulling back by the arrival of winter. Diesel, now averaging $2.83 per gallon, is up four cents from last week and will likely keep rising because of higher demand for heating oil, diesel’s close chemical cousin.

Oil prices managed to rise almost $1 per barrel from a week ago, with benchmark West Texas Intermediate crude trading near $57 per barrel. Unrest in Saudi Arabia and tensions between Riyadh and Lebanon have been bullish for oil, as traders wonder about possible interruptions in Saudi crude exports. OPEC has also raised its projections for global oil demand growth for this year and 2018, citing the strengthening world economy.

Via E-mail: Energy Alerts from Kiplinger

We think oil prices are due for a pullback. Global oil supplies remain ample relative to demand, and data from the Department of Energy show that U.S. production is growing steadily. The recent run-up in prices could encourage energy firms to drill faster in Texas and other oil-rich states, bringing yet more supply to market. In February, we look for WTI to trade from $50 to $55 per barrel — modestly below today’s price.


A cold snap has lifted natural gas prices, with the benchmark gas futures contract recently trading at $3.20 per million British thermal units (MMbtu). If temperatures remain low, look for gas prices to edge a bit higher. But if temperatures moderate in the heavily populated Northeast and mid-Atlantic, we look for gas to retreat to about $3 per MMBtu, the level it has traded near for several months.

Source: Department of Energy, Price Statistics