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Economic Forecasts

Gas Prices Start to Climb

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.5% growth in '19, down from 2.9% in '18 More »
Jobs Unemployment rate will decline to 3.4% by end '19 More »
Interest rates 10-year T-notes at 3.6% by end ’19 More »
Inflation 2.3% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $65 to $70 per barrel in March More »
Housing 5.35 million existing-home sales in ’19, down 0.4% More »
Retail sales Growing at least 4% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Don’t look now, but gasoline prices just rose for the first time in months. After peaking in early October, the national average price of regular unleaded fell every week after, according to the Department of Energy. That changed this past week, when the national average climbed a penny, to $2.25 per gallon. Although that’s still cheap, we expect prices at the pump to keep working their way up. Diesel, which has also been dropping, fell again last week to a national average of $2.93 per gallon. But odds are diesel prices will start perking up, too.

Gas is getting more expensive largely because crude oil has rallied from last month’s lows. Benchmark West Texas Intermediate crude has risen from about $42 per barrel in late December to $51 today. That increase will eventually translate into costlier gasoline and diesel fuel. And we expect oil prices to keep trending higher this winter. Saudi Arabia and its OPEC partners are cutting production, as is Canada. U.S. energy firms have also reduced their drilling activity in response to oil’s woes. We look for WTI to trade from $65 to $70 per barrel in March.

Via E-mail: Energy Alerts from Kiplinger

Natural gas prices got a major lift from the winter storm that hit much of the country this weekend. Wintry weather and strong heating demand caused traders to bid up the benchmark gas futures contract from $3 per million British thermal units to $3.50 in a matter of hours. But unless the weather pattern remains cold and snowy over the heavily populated Mid-Atlantic and Northeast, we look for gas prices to retreat toward $3 per MMBtu fairly soon.

Source: Department of Energy, Price Statistics