Energy Prices Forecast

Economic Forecasts

Gasoline Prices to Rise on Middle East Jitters

Kiplinger's latest forecast on the direction of energy prices

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GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 170,000 per month in '19 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.3% in ’19, up from 1.9% in ’18 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading near $60 per barrel in October More »
Housing 5.35 million existing-home sales, down 1.1% in ’19 More »
Retail sales Growing 4.3% in '19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Motorists might want to gas up their cars now, before prices head higher because of the jump in crude oil caused by this weekend’s attack on Saudi Arabian oil infrastructure. Prices at the pump had been low and trending lower in recent months, thanks to relatively cheap crude. In fact, the national average price for regular unleaded of $2.56 per gallon is almost 30 cents cheaper than at this time a year ago. Look for that number to rise as costlier crude oil filters through to the retail level.

How high will oil prices go? It depends on how serious the situation in the Persian Gulf region becomes. The United States is accusing Iran of carrying out the attacks — on Saudi oil fields and a key crude treatment plant — which halted more than half of the kingdom’s crude production. Tehran denies the accusation. If the present tensions escalate and put more of the region’s vast oil output at risk, West Texas Intermediate crude could add substantially to its current rally, which has seen WTI rise from $55 per barrel to $61. If an actual shooting war erupts, the sky is the limit. But if tensions ease, prices may drop sharply. At present, the world is fairly well supplied with oil. Global stockpiles are ample. The United States is prepared to release barrels from its Strategic Petroleum Reserve. And the Saudis are scrambling to restore production.

Via E-mail: Alerts from Kiplinger: energy news and more

We look for WTI to trade near $60 per barrel in early October, reflecting lingering risks to Saudi oil production but, we hope, not additional attacks or full-blown military conflict.

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Natural gas prices are quietly perking up. The events in the Middle East don’t have much bearing on the domestic natural gas market, but traders are bidding up gas anyway. Perhaps that was inevitable after the benchmark gas futures contract fell to a multiyear low near $2 per million British thermal units in recent weeks. Gas is still fairly cheap at $2.67 per MMBtu now. And it’s likely to pull back again this fall, when the weather across much of the country is neither hot enough to spark much electricity demand or cold enough to cause many folks to fire up their heating systems.

Source: Department of Energy, Price Statistics