Energy Prices Forecast

Economic Forecasts

Oil Prices Stage a Comeback

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.6% growth in '19 More »
Jobs Job gains of about 175,000 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 markets remain as volatile as ever, but prices are trending up. Benchmark West Texas Intermediate crude has risen to nearly $60 per barrel, up from its recent low of about $52 per barrel last month. Confrontations between the U.S. and Iran in the Persian Gulf, plus OPEC’s continued effort to rein in oil exports and an early hurricane in the Gulf of Mexico have combined to push oil prices higher. It also helps that the Federal Reserve appears poised to lower its benchmark interest rate, which would weaken the dollar’s value. A weaker greenback tends to raise the price of dollar-denominated oil contracts.

Oil markets remain as volatile as ever, but prices are trending up. Benchmark West Texas Intermediate crude has risen to nearly $60 per barrel, up from its recent low of about $52 per barrel last month. Confrontations between the U.S. and Iran in the Persian Gulf, plus OPEC’s continued effort to rein in oil exports and an early hurricane in the Gulf of Mexico have combined to push oil prices higher. It also helps that the Federal Reserve appears poised to lower its benchmark interest rate, which would weaken the dollar’s value. A weaker greenback tends to raise the price of dollar-denominated oil contracts.

Via E-mail: Energy Alerts from Kiplinger

Going forward, the only certainty is more volatility, as oil traders debate the effects of the Fed’s policies and watch for signs of weakness in the global economy. There’s potential for more tension in the Middle East, and there’s no telling if another tropical storm will force Gulf refineries to shut down again. So expect plenty of short-term ups and downs. But we expect oil prices to remain elevated, and even creep slightly higher in August.

Motorists are paying more at the gas pump. The national average price of regular unleaded rose 4 cents from a week ago to reach $2.79 per gallon. Given the disruptions to refinery operations last week when Hurricane Barry came ashore, gasoline supplies will probably shrink a bit and push retail prices above $2.80 per gallon. Diesel, now averaging $3.01 per gallon, climbed a penny from a week ago and may edge slightly higher.

Natural gas prices remain deeply depressed, with the benchmark gas futures contract recently trading at $2.33 per million British thermal units. That comes as something of a surprise, given the hot weather gripping much of the U.S. Heat waves trigger higher electricity demand and force gas-fired power plants to work overtime to keep air conditioners running. But so far, the heat hasn’t been severe enough. It seems that only a long-lasting, extreme heat wave will be enough to give any sort of boost to natural gas prices.

Source: Department of Energy, Price Statistics