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Economic Forecasts

Gas Prices to Keep Declining

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.6% pace in '18, up from 2.2% in '17 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 continue to creep lower. The national average price of regular unleaded slipped two cents from a week ago, to $2.46 per gallon. We expect the price at the pump to keep declining, albeit very slowly, with the national average landing near $2.40 by Christmas. Diesel, meanwhile, should keep edging higher. Now averaging $2.84 per gallon, diesel is up a couple of pennies from a month ago and will likely near $2.90 in January.

Oil prices have been volatile but haven’t showed any clear trend, either up or down. OPEC’s move to keep its production cuts in place for another year didn’t seem to have much effect on the market. At a bit over $57 per barrel, benchmark West Texas Intermediate crude is little changed from a week ago. Some traders are looking for prices to rise from here because of stronger economic growth around the world, plus OPEC’s cap on its oil sales. But U.S. crude production keeps climbing, which threatens to offset some of OPEC’s cutback and keep markets well-supplied. We think that oil prices are due for a bit of a pullback, with WTI trading from $50 to $55 per barrel in February.

Via E-mail: Energy Alerts from Kiplinger

Even the arrival of wintry weather in the eastern United States hasn’t been enough to light a fire under natural gas prices. In fact, the benchmark gas futures contract has traded down recently, under $3 per million British thermal units (MMBtu). We look for natural gas prices to keep hovering near $3 per MMBtu into the new year, unless severe cold weather grips the heavily populated Northeast and Mid-Atlantic. Otherwise, there just won’t be enough heating demand to lift prices out of their current trading range.

Source: Department of Energy, Price Statistics