Gasoline prices are trending downward as oil prices fall and gasoline futures (RB=F) approach three-year lows.
According to AAA data, the national average at the pump on Wednesday was near a six-month low of $3.32 per gallon. That’s $0.49 less than exactly a year ago.
“Combined with the end of the U.S. summer gasoline season and a relatively quiet hurricane season, oil prices have simply collapsed. That decline has been driven by weak gasoline prices,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.
Lipow predicted that the average retail price in nine states was below $3 a gallon on Wednesday. Half the country will likely reach those levels by the end of September as much of the country switches to cheaper winter gasoline later this month.
“There is a strong possibility that the average national retail price of gasoline will reach $3 per gallon by the end of the year,” he added.
Oil fell 4% on Tuesday, wiping out the commodity’s gains so far this year on concerns about China’s economy and additional supplies expected from OPEC+ this fall. Over the summer, the oil alliance signaled it would reverse some of its voluntary production cuts starting in October.
On Wednesday, West Texas Intermediate (CL=F) hovered below $70 a barrel, while Brent (BZ=F), the international benchmark, traded around $73 a barrel.
“The low prices … may force OPEC+ to reconsider its policy and I would not be surprised if they reverse course and stick with their current production levels,” Lipow wrote in a note to clients.
