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Economic Forecasts

Gasoline Prices Heating Up

Kiplinger's latest forecast on the direction of energy prices

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GDP 3.0% pace in '18, up from 2.3% in '17 More »
Jobs Slower job gains likely this year as labor market tightens More »
Interest rates 10-year T-notes at 3.3% by end '18 More »
Inflation 2.6% 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 $60 to $65 per barrel in June More »
Housing Price growth: 5.0% by end of '18 More »
Retail sales Growing 4.2% in '18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in '18 More »

Gasoline prices keep climbing. The national average price of regular unleaded now stands at $2.76 per gallon, up a nickel from a week ago. Such run-ups at the pump are common in spring, and this one probably still has a way to go. Look for the national average price to surpass $2.80 soon and eventually hit $3 later this spring, for the first time since late 2014. Diesel is also perking up; it now averages $3.04 per gallon, which is three cents more than a week ago.

Crude oil has rallied recently. Benchmark West Texas Intermediate now trades at $68 per barrel, near its highest level in several years. OPEC’s continuing push to boost prices by restricting its collective output seems to be working, especially with oil production falling sharply in Venezuela amid a worsening economic crisis. The strong global economy also means plenty of demand. But higher prices are spurring U.S. energy companies to drill faster and pump more crude, which ought to keep WTI from rallying much further. We see U.S. crude trading from $60 to $65 per barrel in June as swelling American oil output makes up for more of the barrels OPEC isn’t pumping.

Via E-mail: Energy Alerts from Kiplinger

Natural gas prices remain depressed, with the benchmark gas futures contract recently trading at $2.74 per million British thermal units (MMBtu). Warmer weather across most of the United States means less demand for gas to heat homes. A hot summer could cause electricity use to spike and rev up power plants’ need for gas. But for now, temperate spring weather probably means gas prices will stay stuck below $3 per MMBtu.

Source: Department of Energy, Price Statistics