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Economic Forecasts

Prices at the Pump to Stay Low

Kiplinger's latest forecast on the direction of energy prices

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GDP 2.1% pace in '17, 2.4% in '18 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 1.3% in '17, down from 2.1% in '16 More »
Business spending Rising 3%-4% in '17, after flat '16 More »
Energy Crude trading from $40 to $45 per barrel in September More »
Housing 5.5% price growth by end of '17 More »
Retail sales Growing 3.5% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Oil prices have perked up slightly on hopes that OPEC and other oil-exporting nations will curb production. But a sustained price rally remains unlikely.

Benchmark West Texas Intermediate was recently trading at $46 per barrel, up a buck from a week ago. Saudi Arabia announced that it would lower its output this summer, and OPEC also secured agreement from Nigeria to participate in the cartel’s production quotas. (Nigeria was previously granted an exemption from the deal because it was recovering from terrorist attacks on its oil infrastructure. The recent increase in Nigerian production was one factor that had thwarted OPEC’s goal of reducing worldwide oil stockpiles.)

We expect oil prices to decline slightly by late summer, with WTI trading between $40 and $45 per barrel in September. Global stockpiles of crude and refined fuels remain elevated, which will keep downward pressure on prices. And U.S. shale oil output continues to rise each week, offsetting some of OPEC’s cutbacks.

Via E-mail: Energy Alerts from Kiplinger

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Gasoline prices are up slightly. The national average price of regular unleaded rose three cents from a week ago, to $2.28 per gallon. We expect the average price to fluctuate near that level in coming weeks. Diesel, now averaging $2.45 per gallon, is up a penny from a week ago and will likely stay near $2.50 for the rest of the summer.

Natural gas prices fell back after forecasts called for cooler weather. The benchmark gas futures contract recently traded at $2.91 per million British thermal units (MMBtu), down more than a dime from a week ago. The heat wave that has gripped much of the country spurred heavy demand from gas-fired power plants. Now, with some lower temperatures in the forecast, traders are betting that gas demand will moderate. Barring an extreme, sustained heat wave, we look for gas to continue trading near $3 per MMBtu.

Source: Department of Energy, Price Statistics