Energy Prices Forecast

Economic Forecasts

Gasoline Prices to Inch Higher

Kiplinger's latest forecast on the direction of energy prices


GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 150,000 per month in ’20 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.2% through ’20, from 2.3% at end '19 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $60 to $65 per barrel in March More »
Housing Total starts up 3.2% in '20 More »
Retail sales Retail and food service sales excluding autos and gas should rise 3.5% in 2020 More »
Trade deficit Widening 6% in ’20 More »

Last week’s rally in oil prices proved fleeting, with crude prices pulling back sharply a few days after rising on fears that the U.S. missile strike on a prominent Iranian general would lead to war between the two countries. An actual confrontation between Washington and Tehran would indeed jeopardize oil shipments in the Persian Gulf. But after it became clear that such a conflict was not imminent, benchmark U.S. crude prices fell from $63 per barrel to today’s $58.

Assuming no war in the Middle East, we look for West Texas Intermediate crude to gradually trend higher in coming months, trading from $60 to $65 per barrel in March. Why? U.S. production gains are slowing as energy companies reduce the number of rigs drilling new oil wells. And OPEC continues to curb its collective exports to boost prices. Plus, the global economy is looking healthier than it did a few months ago, which suggests oil demand could be stronger than previously expected.

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Gasoline prices are flat from a week ago, with the national average of regular unleaded steady at $2.58 per gallon. We look for the price at the pump to rise as winter turns to spring, as it tends to do. More folks hit the road on vacation when the weather warms up, and refiners have to switch over to making costlier summer-blend gasoline formulations. In fact, the national average gas price may hit $3 sometime this spring or summer, a level it hasn’t reached since 2014. Diesel, now averaging $3.01 per gallon, is also little changed from a week ago and will probably hold steady this winter.


Natural gas prices remain near multiyear lows. The benchmark gas futures contract was recently trading at $2.18 per million British thermal units. A relatively warm winter so far has kept heating demand muted, while gas stockpiles are higher than normal for this time of year. Weak demand plus strong supply usually leads to low prices, and that certainly has been true for the natural gas market. A sharp, prolonged spell of cold weather could give gas prices a modest lift, but otherwise we expect gas to remain cheap into spring.

Source: Department of Energy, Price Statistics