Gasoline prices are trending lower as crude oil prices fall and gasoline futures (RB=F) approach three-year lows.
The national average at gas stations on Wednesday was $3.32 a gallon, near a six-month low and $0.49 cheaper than exactly a year ago. AAA Data.
“The end of the U.S. summer gasoline season, combined with a so far mild hurricane season, has caused oil prices to fall sharply. The decline is driven by weak gasoline prices,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.
As of Wednesday, the average retail price in nine states was below $3 a gallon, and Lipow predicted that half the country’s states will likely reach that level by the end of September as much of the country switches to cheaper winter gasoline later this month.
“The national average retail price of gasoline is likely to reach $3 a gallon by the end of the year,” he added.
Oil prices fell 4% on Tuesday, wiping out gains so far this year amid worries about the Chinese economy and expectations of additional supply from OPEC+ this fall. The oil alliance had signaled over the summer that it would scale back some of its voluntary production cuts from October.
West Texas Intermediate (CL=F) was trading below $70 a barrel on Wednesday, while the international benchmark Brent crude (BZ=F) was trading around $73 a barrel.
“Lower oil prices may force OPEC+ to reassess their policies and I would not be surprised if they change course and maintain current production levels,” Lipow said in a client note.
