Energy Prices Forecast

Economic Forecasts

Oil Market Rocked by Extreme Volatility

Kiplinger's latest forecast on the direction of energy prices


GDP -5.8% growth in 2020, down from 2.3% in 2019 More »
Jobs States are reopening, but workers will come back slowly More »
Interest rates 10-year T-notes staying below 1.0% for a while More »
Inflation 0.3% by the end of '20, from 2.3% at end '19 More »
Business spending Down 10% to 20% in '20 More »
Energy Crude oil trading near $30 per barrel in a volatile market More »
Housing Total starts down 2.0% in '20 More »
Retail sales E-commerce surge will last More »
Trade deficit Widening 6% in ’20 More »

Gasoline prices are still cheap, but they’re rising steadily as more states reopen their economies and more consumers take to the roads. The national average price of regular unleaded rose three cents from a week ago to reach $1.88 per gallon. That’s about a dollar cheaper than this time last year, but it’s also up a dime from the low point reached in late April. Diesel, now averaging $2.41 per gallon, has been steadier lately. But its price didn’t fall as much in the first place because trucks and trains kept running this spring, while many gas-powered cars were idle.

Expect the price at the pump to keep climbing as the price of crude oil rises. Benchmark West Texas Intermediate, which actually traded below $0 briefly last month, due to a quirk of futures markets, has soared to $32 per barrel. That’s still only about half of where it was in January, before the coronavirus took an ax to global oil demand, but it appears that the worst is over for the oil market. Demand is coming back, and producers around the world have drastically curbed output. We look for oil prices to remain volatile, with big swings up and down as traders try to figure out what supply and demand look like amid the ongoing pandemic.

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Natural gas hasn’t been able to sustain a rally of its own. Gas prices are slightly above their lows hit this winter, but they remain deeply depressed, with the benchmark gas futures contract recently trading at $1.79 per million British thermal units. Eventually, though, gas prices should trend higher as the reduction in oil drilling also lowers the production of gas, which comes up many oil wells as a by-product. Plus, the U.S. electricity sector relies more than ever on gas to generate power. A hot summer could be the catalyst that finally pushes gas prices above $2 per MMBtu again.

Source: Department of Energy, Price Statistics