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Economic Forecasts

Oil Market to Remain Jumpy

Kiplinger's latest forecast on the direction of energy prices


GDP 2.9% pace in ’18, up from 2.2% in ’17 More »
Jobs Unemployment rate will decline further More »
Interest rates 10-year T-notes at 3.2% by end ’18 More »
Inflation 2.5% in ’18, up from 2.1% in ’17 More »
Business spending Up 7% in ’18, boosted by expanded tax breaks More »
Energy Crude trading from $65 to $70 per barrel in December More »
Housing Price growth: 5.0% by end of ’18 More »
Retail sales Growing 5.1% in ’18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in ’18 More »

Gasoline prices are holding steady, with the national average price of regular unleaded unchanged from a week ago at $2.85 per gallon. In fact, that’s exactly where gas prices averaged a month ago, too. With crude oil prices trading in a tight range, there hasn’t been much reason for the price at the pump to rise or fall. But we look for gas prices to gradually decline in coming weeks, following the typical autumn seasonal pattern. At $3.19 on average, diesel is up a penny from a week ago and could drift a bit higher as demand for chemically similar heating oil mounts.

Crude oil prices remain jumpy but aren’t following any clear up or down pattern. Benchmark West Texas Intermediate crude spiked last month on reports of militia violence in Libya, which threatened the country’s exports. But WTI quickly retreated to $68.60 per barrel to start this week. The mounting trade tensions between the United States and China could weigh on demand for oil if shipping volumes decline. Meanwhile, it’s still unclear whether new sanctions on Iranian oil exports will be offset by extra production from other OPEC members.

We look for oil to continue its choppy, sideways trading, with WTI in a range of $65 to $70 per barrel in December.

Natural gas prices are still hovering below $3 per million British thermal units, with the benchmark gas futures contract recently at $2.81 per MMBtu. Odds are it will stay close to that level unless there is a sudden cold snap that fires up heating demand in the heavily populated Northeast and in big Midwestern cities. Gas stockpiles are low for this time of year, but production is booming, so traders seem unconcerned about tight supplies for now. As long as the weather remains mild across most of the country, gas demand will stay low and prices are unlikely to move higher.

Via E-mail: Energy Alerts from Kiplinger

Source: Department of Energy, Price Statistics