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Economic Forecasts

Drivers Catch a Break on Gas This Thanksgiving

Kiplinger's latest forecast on the direction of energy prices

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Gasoline prices are starting to decline, just in time for Thanksgiving road trips. The national average price of regular unleaded slipped by two cents this week and now sits at $2.54 per gallon. Ordinarily, heavy driving around the holiday would boost demand and cause gas prices to rise a bit. But this year, it looks like prices at the pump will dip a little further. Figure on the national average nearing $2.50 this weekend. Diesel, now averaging $2.84 per gallon, is up a penny from a week ago and will probably continue a slow but steady increase as demand for chemically similar heating oil picks up.

Oil prices are also taking a breather after a furious autumn rally that saw benchmark West Texas Intermediate crude shoot up by more than 20%. At a bit under $56 per barrel, WTI is off slightly from a week ago. We had been looking for the run-up in oil prices to lose momentum. In the United States, crude production continues to rise, and supplies of crude in storage are also growing. Aside from Thanksgiving-related travel, gasoline demand tends to be low this time of year, which is also bearish for oil prices. We expect WTI to trade between $50 and $55 per barrel in February as markets remain amply supplied.

Via E-mail: Energy Alerts from Kiplinger

Natural gas prices just cannot break out of their trading range. The benchmark gas futures contract eased a bit from last week, falling to $3.06 per million British thermal units. That is largely unchanged from the $3 or so that gas has fetched recently. Cold weather briefly pushed prices up last week, but unless temperatures drop significantly and stay low for an extended period, gas prices will probably continue to hold near $3.

Source: Department of Energy, Price Statistics