Gasoline prices are showing a notable retreat from their 2023 peak last month, in tandem with a cooling off of crude oil prices. Tom Kloza, the Head of Energy Analysis at OPIS, projects a drop in retail prices ranging from 25 to 50 cents per gallon, stating that this shift, while gradual, will be readily apparent to consumers.
The primary force behind this downward pricing trend is a decrease in demand, as indicated by the latest data from the Energy Information Administration, marking the lowest seasonal levels in a quarter-century. At present, the average retail gasoline price stands at $3.77 per gallon, reflecting a 43-cent decrease from just one week ago, according to AAA.
The underlying commodity, oil, which is fundamental to transportation fuels, has experienced a rapid decline this week after a robust 28% surge in the last quarter. The spike in oil prices during September, reaching a 2023 high, was attributed to OPEC+ output reductions, voluntary cutbacks from Saudi Arabia, and export constraints imposed by Russia. However, prices have now cooled.
JPMorgan analysts have recently forecasted a decline in global oil demand for this quarter, coinciding with oil prices peaking at $90 per barrel. As of this week, West Texas Intermediate and Brent International have stabilized at approximately $84.50 and $85.80 per barrel, respectively.
While motorists can anticipate a gradual decline in fuel costs, akin to “wet feathers”, the process will span between 25 to 50 cents per gallon. AAA reports that in roughly half of all states, drivers can currently find gasoline priced at less than $2.99 per gallon.
These diminishing trends in oil and gasoline prices signify a boost in consumer purchasing power and enhanced financial stability for individuals heavily reliant on transportation fuels, including truckers and farmers. While the long-term economic repercussions of this shift remain uncertain, the relief in pricing pressure is a welcome development for the millions of American drivers seeking to save at the pump.
Source: Yahoo Finance
